Nuclear project on the hunt for new backers
ENERGY minister Charles Hendry said yesterday that RWE and E.ON’s British nuclear joint venture, Horizon, needs to find new investors if it is to survive because its existing backers will not stump up more cash.
Britain’s nuclear future was thrown into doubt in March when RWE and E.ON, under pressure from their home country’s decision to phase out nuclear power, announced the sale of Horizon, while the government is pushing through an electricity market reform that seeks to attract new nuclear investment.
“We would not expect it to be one of the other two nuclear consortia to take over Horizon. I think this would be new investors who come forward,” the minister, Charles Hendry, told a parliamentary committee.
He added that the government had approached sovereign wealth funds for investment.
Horizon, based in Gloucester, plans to build at least six gigawatts (GW) of new nuclear power capacity at sites in Oldbury, central England, and Wylfa, north Wales, an investment RWE and E.ON had estimated at £15bn.
The two other consortia to have proposed building new nuclear plants in Britain are France’s EDF together with Britain’s Centrica and France’s GDF Suez in partnership with Spain’s Iberdrola.
We have quite actively sought investment (in Horizon) from sovereign wealth funds, in different parts of the world because of their desire to invest in low carbon technologies,” Hendry told the committee.
Five groups are currently eyeing the purchase of Horizon, including U.S., Chinese and Middle Eastern investors, a senior industry source told Reuters two weeks ago.
Volker Beckers, CEO of the German utility’s UK arm RWE npower, told the same committee on Tuesday that the companies were now in conversation with potential buyers and that an information memorandum had been agreed with a sales advisor, but declined to disclose any names.
Hendry said the utilities had appointed Japanese bank Nomura as financial advisor for the Horizon sale.
Even though the choice of buyer is ultimately in the hands of the utilities, the UK government has a strong interest in helping to find a suitable candidate because much of its electricity market reform, due to be laid before Parliament on May 22, rests on the assumption that nuclear will form part of the future energy mix.
The proposals aim to reward producers of low-carbon energy, including nuclear, by guaranteeing a minimum electricity price.
The government is looking for an investor that meets Britain’s nuclear safety and security requirements and who can offer a benefit to the UK more generally, Hendry said.
“What we’re looking for is a consortium where there is real proven expertise,” he said.