Earlier this month, German utilities EON AG (ETR: EOAN) and RWE AG (ETR: RWE) closed bidding on Britain’s Horizon nuclear project after both withdrew from the project, citing escalating costs.
Just recently, more details emerged, and it appears that the two utilities will be selling their venture to Hitachi Ltd. (TYO: 6501) of Japan for $967 million.
The deal will, of course, be beneficial to the British government, which is currently embroiled in a complicated energy transition phase, trying to upgrade overall grids, replace aging power plants, and reduce pollution—all for 110 billion pounds ($176 billion).
Following Fukushima, Germany decided to completely exit the nuclear sector and shut down all reactors, which caused the overall industry to shrink drastically.
Britain hasn’t named any figures, but the nation seems set to build at least 16 gigawatts of new nuclear reactors by 2025, spread out over eight sites. But the Horizon program hit early problems when Areva SA (EPA: AREVA) and China Guangdong Nuclear Power Group both pulled out of the bidding and SSE Plc (LON: SSE) also exited the game.
Much of the guarantee for the atomic program rests on forthcoming legislation that is expected to set guarantee prices for power purchases. These terms are currently being negotiated, and Energy Secretary Ed Davey is expected to make a statement before Parliament in November.
Hitachi will use the Hitachi Advanced Boiling Water Reactor for the project. This system, part of a joint venture with GE (NYSE: GE), is already operational in Japan, has licenses for the U.S. and Taiwan, but is yet to be approved in Britain.
A joint team of Westinghouse Electric and China’s State Nuclear Power Technology Corp. was also in the process of bidding for Horizon, but Westinghouse has stalled work on its reactor design while it secures a British customer.
Now that EON is expected to pull out of the Fennovoima Oy nuclear reactor in Finland (announced this week), neither EON nor RWE are at all active in developing new nuclear projects. In fact, now the U.K. is one of just 3 western European countries developing nuclear projects.