EON, RWE Said to Sell British Nuclear Venture to Hitachi

EON AG and RWE AG, Germany’s two largest utilities, are set to sell their U.K. venture Horizon Nuclear Power to Japan’s Hitachi Ltd., people familiar with the matter said.

The sale for the venture with government backing to build plants in Wales and western England will be signed in the next few days, according to two people, who asked not to be identified because the negotiations are private.

The deal would be a boost for the U.K. government, which is seeking to spur new reactors to replace aging power plants, upgrade grids and cut pollution at a cost of 110 billion pounds ($178 billion). EON and RWE decided to sell Horizon after Germany said it will close all of its reactors following last year’s disaster in Japan, prompting the utilities to pull out of the nuclear industry worldwide. That left the U.K. as one of only three western European nations pursuing new reactors.

Keisaku Shibatani, a spokesman for Hitachi, said the company had put in a bid and declined to comment further. Officials at RWE and EON declined to comment. An official at the U.K. Department of Energy and Climate Change said that while the deal was a commercial matter for RWE and EON, there had been strong interest in buying Horizon.

No Nuclear Target

While Britain has no specific target for new nuclear, industry has set out plans to build 16 gigawatts of new reactors by 2025. The U.K. has designated eight sites for plants. The program appeared to unravel when Areva SA and China Guangdong Nuclear Power Group Co. decided against bidding for Horizon this month and SSE Plc earlier gave up plans. That left Electricite de France SA, Iberdrola SA and GDF Suez SA as the only developers progressing U.K. nuclear plans.

“It’s the best news that one can imagine at this stage but it’s not a guarantee that new nuclear is going to go ahead,” said Malcolm Grimston, an analyst at the Chatham House research group in London.

The atomic program will hinge on legislation overhauling the electricity market including contracts that guarantee prices for power, Grimston said. Energy Secretary Ed Davey will put his final proposals for an Energy Bill before Parliament next month.

DECC is currently negotiating with EDF on the commercial terms of the U.K.’s first atomic project since the 1980s. EDF said Oct. 23 a final investment decision for the Somerset-based reactors required more progress and a compeling business case.

Hitachi Technology

Hitachi’s Advanced Boiling Water Reactor, which it makes with General Electric Co., has been licensed in the U.S., Taiwan and Japan. While it is yet to seek U.K. approval through a process known as Generic Design Assessment, the reactor equipment already operates in Japan.

“In terms of global positioning of the technology, it’s ahead of the game,” Grimston said by phone. “Inherently, you’d think that it would be easier to get a GDA for a case where the inspectors can actually look at one working.”

A team comprising Westinghouse Electric Co. and China’s State Nuclear Power Technology Corp. was also expected to bid for the Horizon venture. Westinghouse’s AP1000 model and a design by Areva SA, called the European Pressurized Reactor, received “interim” approvals from British regulators on Dec. 14 under the GDA process.

Westinghouse U.K. Chief Executive Officer Mike Tynan said on Sept. 27. his company had paused the process until it has a British customer while Areva’s EPR continues to answer questions identified by regulators.

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