German utilities EON AG (ETR: EOAN) and RWE AG (ETR: RWE) closed bidding on Britain’s Horizon nuclear power project on Friday. The two companies are withdrawing from the program on high costs.
The group of bidders was comprised of Areva SA (EPA: AREVA) and China Guangdong Nuclear Power Group Co., a Hitachi Ltd.-led partnership, and a team made up of Westinghouse Electric Co. and China’s State Nuclear Power Technology Corp.
The Horizon project is Britain’s push to replace existing aging nuclear stations and reduce CO2 emissions. Areva and Westinghouse have already provided the British government with reactor designs and have obtained preliminary regulatory approval.
“Areva and Westinghouse were the technology suppliers bidding into Horizon in the first place and are already in the Generic Design Assessment process,” Daniel Grosvenor, head of the nuclear team at Deloitte LLP in London, said by phone. “The Hitachi group has some catching up to do.”
The Areva group is, so far, the only team to have committed itself to the Horizon project. The Horizon project is backed by Britain’s government, and it aims to locate reactors in Wales and western England.
The government needs almost $178 billion in investments by 2020 in order to replace plants, upgrade grids, and reduce emissions. Presently, the U.K. gets 22 percent of all needed power from nuclear sources.
However, all of this was not enough for EON and RWE; they have cited the high capital costs as a major reason for pulling out. It’s possible that Horizon will nevertheless see bids amounting to 300 million pounds or more – upwards of $484 million.
Areva received regulatory approval on December 14 for its European Pressurized Reactor design. Westinghouse also received similar approvals for its AP1000 model. Both companies faced regulatory costs of around 25 million pounds ($40 million) each. Areva is building the EPR reactor in Finland, France, and China.