Energy companies' role in nuclear development
City analysts and pension fund managers will have a big say in whether nuclear build actually goes ahead, as these tend to be the largest institutional investors in the energy sector.
The government's 2008 White Paper on Nuclear Power makes clear that nuclear development is not really a decision for government at all because it will be for energy companies to fund, develop and build new nuclear power stations in the UK, including meeting the full costs of decommissioning and their full share of waste management costs.
Under the current energy market framework, the government’s primary role is mainly as a facilitator rather than a decision-maker. Two competing Generation III+ pressurised water reactor designs are currently being licensed by the British nuclear safety regulator; the French 1,600 MWe Areva EPR and the American 1,150 MWe Westinghouse AP1000.
The government has not fixed any upper or lower limit on the amount of new nuclear capacity that could be built in Britain. However a working assumption is that a minimum of 10 GWe would be needed by 2023 to replace Britain's retiring AGR fleet. The August 2009 Wicks Review by the Prime Minister’s Special Representative on International Energy Issues recommended that nuclear power should provide some 35 - 40% of Britain’s electricity beyond 2030.
Who will build reactors in Britain and when?
The credit crunch has seriously limited the ability of energy utility firms to raise finance for nuclear build projects. Instead the nuclear builds being contemplated in Britain are self-funded from company balance sheets. But individual utilities are not strong enough to fund nuclear build projects on their own.
Although energy companies are normally highly competitive with each other, the credit crunch has forced utilities to pool their financial resources together, creating different consortia groups of nuclear energy utility firms to share risks.
Three competing energy utility consortia are participating in the first wave nuclear renaissance in the UK; A French dominated consortium comprising EDF Energy with Centrica (80% : 20%); A German consortium comprising RWE with E.ON (50% : 50%); And a Spanish-French consortium comprising Iberdrola with GDF Suez and minority partner Scottish and Southern Energy (SSE) (37.5% : 37.5% : 25%). Together these three nuclear consortia are 85% foreign owned, with the London Stock Exchange listed FTSE 100 British companies Centrica and SSE making up just 15% of the overall shareholding. During 2009 the consortia invested £500 million acquiring land for nuclear development in Britain.