(Updates with closing RWE share price in 11th paragraph.)
Oct. 4 (Bloomberg) -- RWE AG and EON AG are pressing ahead with plans to build new reactors in the U.K. after the German government ordered the closure of nuclear plants at home.
“We are still recruiting people and spending almost a million pounds ($1.54 million) every single week,” Volker Beckers, chief executive officer of RWE’s U.K. Npower division, said in an interview in Bloomberg’s London bureau.
Germany’s largest power producers are two of the six utilities planning to build nuclear plants in the U.K. Their Horizon venture has secured two sites in Wales and the west of England with the goal of starting construction of the first reactor by 2015. A public backlash in Germany following the disaster at Japan’s Fukushima Dai-Ichi plant prompted the government to announce plans to close all its reactors.
“In Germany, a big proportion is against nuclear power stations, while here you see an increase in acceptance,” Beckers said. “For an investor it’s key you invest into a country where you have a supportive framework: political, commercial and social. I do see this in the U.K.”
A Populus poll of 2,050 people conducted for the British Science Association in August found that 54 percent of people support the construction of new nuclear stations if it would help tackle climate change, and 61 percent back it if it would improve energy security.
In the months following the March tsunami in Japan, the British and French governments reiterated support for atomic energy, while Chancellor Angela Merkel rolled back plans for reactor life extensions. In March, the German government decided to shut more than 25 percent of the country’s nuclear capacity and phase out atomic energy completely by 2022.
Other companies considering building nuclear power stations in the U.K. include Electricite de France SA and Centrica Plc, Iberdrola SA and GDF Suez SA. Britain can currently get about 20 percent of its power from its 10 nuclear stations, five of which are due to shut over the next decade.
“It makes good business sense to keep the option open,” UniCredit SpA analyst Lueder Schumacher said in a telephone interview. “The potential benefits could be huge. They’re not obvious now, but it wouldn’t be prudent to slam the door shut. Who knows what things are going to be like in 10 years.”
Utilities may need to spend as much as 6 billion pounds per reactor, according to U.K. Energy Minister Charles Hendry. The British government approved eight sites for new nuclear plants in October last year and the country’s nuclear regulator is in the process of assessing two new designs, Areva SA’s EPR reactor and Westinghouse Electric Co.’s AP1000 reactor.
“We need to sustain 12 gigawatts of nuclear,” Beckers said. “We need investments in renewables, we need gas plant as part of the mix and we need a certain slice of coal plant so we can manage volatility in commodity prices.”
RWE fell 1.6 percent to 26.805 euros in Frankfurt. The stock has fallen 46 percent this year, valuing the company at 15 billion euros ($19.9 billion).
Given the track record of reactor projects elsewhere in Europe, delays are possible. Electricite de France SA will spend 5 billion euros, overrunning an initial estimate of 3.3 billion euros, to complete the first-of-a-kind EPR reactor at Flamanville, France. In Finland, Areva SA is behind schedule on its plant at Olkiluoto, initially meant to be finished in 2009. It’s now slated for completion by 2013.
Adopting a “cautious approach,” SSE Plc dropped its plans to pursue construction of a new nuclear plant last month. The utility, which was partnering with GDF and Iberdrola, cited its preference for renewable energy technologies like wind farms. Even before making a final investment decision, Centrica is committed to spending 200 million pounds on the development of a reactor at Hinkley point.
A final report on the implications of the Fukushima disaster for existing U.K. reactors was submitted by the country’s chief inspector of nuclear installations Mike Weightman on Sept. 30. The findings will be presented to parliament by Energy Secretary Chris Huhne next week.
--Editors: Alex Devine, Torrey Clark
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