Centrica threatens to withdraw from UK nuclear project

• 12 years ago (2012-04-21)
• Junior Isles

Europe 1061 Nuclear 640

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Centrica, the only UK company left in the running to build Britain’s new generation of nuclear plants, has threatened to pull out over uncertainty around the government’s energy policy.

Centrica executives have warned British officials that their current plan to build a new nuclear plant, in a joint venture with EDF Energy, at Hinkley Point, Somerset, will be halted if they do not receive sufficient assurances on the pricing of nuclear-generated electricity.

“Nuclear power stations cost £6bn each and we must know what the return is going to be on that kind of investment,” said a company source. “If we don’t get the right answers, we won’t proceed.”

The source indicated that the UK government had a only matter of months to finally detail their support for nuclear.

New reforms designed to attract investment in low-carbon electricity generation, such as nuclear, have already been announced by UK authorities. New nuclear plants are to receive a guaranteed price for electricity generated under the new plan, but crucial final details about the government support have not yet been confirmed.

A potential pullout by Centrica would be a “hammer blow to the future of nuclear,” according to Tim Yeo, chairman of the UK’s energy select committee. “If they are considering pulling out I would regard it as very alarming indeed,” he said.

Centrica is one of the few companies with enough capital to fund long term, multi-billion pound investments in nuclear. Its announcement follows E.On and RWE’s decision three weeks ago to sell their British nuclear power joint venture.

“There are a number of areas where we still need absolute clarity, such as cost, market framework and planning approval and permits,” said a statement by Centrica, regarding the Hinkley Point project. Centrica expects to make a final decision on whether to go ahead with the plant towards the end of the year.

EDF Energy, subsidiary of the French state-run electricity group EDF, would be greatly affected by a Centrica pull-out and would have to decide between funding the joint project itself or seeking a new partner. EDF Energy has declined to comment on Centrica’s plans so far.

DECC, the UK government’s energy department, has also refused to comment on Centrica’s announcement directly, simply confirming: “There remains strong interest in nuclear in the UK – we think that nuclear has a role to play in the future of Britain’s energy.”