29/03/2012 07:49 BST

Nuclear Power Plans Stall After Energy Companies Back Out

Two of the "big six" energy companies have pulled out of developing new nuclear plants in the UK, in what has been described as a "devastating blow" for the government's energy policy.

RWE npower and E.ON said they would not proceed with their "Horizon" project, which looked to develop nuclear reactors at Wylfa in North Wales and Oldbury-on-Severn in Gloucestershire.

The German-owned companies said they were looking for a new owner for Horizon Nuclear Power in the light of a number of considerations, including the global economic crisis and significant costs of the project.

Gary Smith, of the GMB union, said: "This is a devastating blow which leaves the UK Government energy strategy in tatters."

The companies insisted their joint venture company Horizon's development projects were viable for another investor to develop nuclear sites, and confirmed they were committed to investing in energy schemes in the UK.

RWE npower said a strategic review in light of the global economic crisis and the accelerated phase-out of nuclear power in Germany, coupled with significant costs of running the joint venture, had led to the decision while E.ON said its decision had been made against the backdrop of the group's wider financial constraints, but said it would be continuing to invest in Britain.

Volker Beckers, chief executive of RWE npower, said: "We remain convinced that Horizon's development projects represent excellent sites for new nuclear power stations in the UK, and we would like to express our sincere thanks to the Horizon employees for their hard work in bringing the projects to this stage of development.

"We would also like to thank the communities around Wylfa and Oldbury, the business partners we have worked with during development, and everyone who has shown support for our development work.

"It is because of the strength of support for our development work, particularly on the island of Anglesey, that we continue to believe that nuclear power has an important role to play in the UK's future energy mix."

Tony Cocker, chief executive of E.ON UK, said: "E.ON has decided to focus its investment in the UK on other strategic projects that will allow us to deliver earlier benefit for customers and our company, rather than the very long term and large investment new nuclear power calls for.

"Our commitment to the UK remains as strong as ever and as our track record shows, with over £1 billion of investment in the last year alone, we will continue to select the right projects in which to invest."

Responding to the announcement, Energy Minister Charles Hendry said: "E.ON and RWE's withdrawal is clearly very disappointing, but the partners have clearly explained that this decision was based on pressures elsewhere in their businesses and not any doubts about the role of nuclear in UK's energy future.

"The UK's new nuclear programme is far more than one consortia and there remains considerable interest.

"Plans from EDF/Centrica and Nugen are on track and Horizon's sites offer new players an excellent ready-made opportunity to enter the market."

The GMB's Gary Smith said: "It is really bad news in terms of construction jobs and the potential employment that would have been created in the UK manufacturing supply chain.

"New nuclear is an essential component in keeping the lights on in the UK. We can't keep extending the lifespan of existing nuclear stations and renewables cannot fill the gap on their own.

"The government must act, and now. We need an urgent discussion involving government, the industry and unions about where we go from here.

"David Cameron announced a partnership in nuclear with France during a recent visit to Paris. This is nonsense. Britain is going to be a bit player in what is a growing global industry. It simply isn't good enough for government to sit back and hope it's all going to come good.

"We should be looking at trying to create an Airbus in the nuclear industry and not announcing what are meaningless partnerships."

Environmental groups seized on the news as evidence that nuclear power, which provides just under a fifth of UK electricity supplies, was not a viable option for the country's future energy mix.

Greenpeace's policy director Doug Parr said: "The government's energy strategy is crumbling.

"Not even the billions of pounds of taxpayers' money they have offered as incentives to the German and French nuclear industry are enough to make a new generation of power stations economically viable.

"The future isn't nuclear - the future is green.

"The government must now recognise it's high time to invest in making homes energy-efficient and delivering a coherent renewable energy strategy that will provide UK households and businesses with clean, safe and cheaper power that will also create much-needed jobs for the UK economy."