A Franco-Chinese consortium has walked away from the race to build Britain’s new generation of reactors in a setback to the government’s hopes of ushering in a revival of nuclear power.
The widely expected bid by French engineering company Areva and China Guangdong Nuclear Power Group for the Horizon nuclear joint venture did not materialise by last Friday’s deadline, people familiar with the matter said yesterday. The decision narrows the field of would-be investors in a reactor-building programme that is expected to cost tens of billions of pounds.
In a further blow to the flagship government initiative another consortium failed to secure the anticipated backing of a Chinese state company for its bid.
The lack of participation by the Beijing-backed groups raises questions about how to finance the UK’s nuclear revival. Some industry experts believe only Chinese companies have the financial firepower to shoulder the immense cost of building new reactors.
But people close to the talks cautioned against writing off once and for all Chinese involvement in Britain’s nuclear renaissance. Chinese investors were still interested in the UK market, one of the people said, adding they might still back Horizon or other reactor-building ventures at a later date.
The withdrawal of the Areva-led bid leaves two consortiums, led by Japan’s Hitachi and by Westinghouse Electric, competing for Horizon, which owns sites to build nuclear reactors in Wylfa, Anglesey and Oldbury in Gloucestershire. Horizon was put up for sale in March when its owners, RWE and Eon of Germany, abandoned plans to build new nuclear plants in the UK. The decision came after Germany decided to phase out nuclear power following last year’s Fukushima disaster.
Westinghouse, owned by Japan’s Toshiba, had been in talks with China’s State Nuclear Power Technology Corp about joining its consortium, but the US-based electricity company tabled its bid without the Beijing-backed group. Areva and Westinghouse declined to comment.
George Osborne, the chancellor, has tried hard to attract Chinese investment in transport, utility and energy schemes in the UK. In January he visited China, where he met key investors and businessmen, including Lou Jiwei, chairman of the China Investment Corporation, the sovereign wealth fund that recently bought a 9 per cent stake in Thames Water.
The prospect of Chinese investment in Britain’s nuclear programme had triggered alarm among some MPs. Mark Pritchard, a Tory backbencher, warned recently that it would create “major security concerns”.
Areva said in July it was teaming up with China Guangdong to table a bid. But in the end, only two bids were submitted by last Friday’s deadline – one by Hitachi, which has teamed up with SNC-Lavalin, Canada’s largest engineering group, and one by Westinghouse. The winner is expected to be announced within the next three weeks.
Both Westinghouse and Hitachi are keen to secure new export markets for their nuclear technology following their home base Japan’s decision to phase out nuclear power by 2040.