RWE and E.ON Drop U.K. Nuclear Power Joint Venture

Researched by Industrial Info Resources Europe (Galway, Ireland)--Following a strategic review performed separately by both companies, RWE AG (OTC:RWEOY) (Essen, Germany) and E.ON AG (OTC:EONGY) (Dusseldorf, Germany) have announced that they will not proceed to develop new nuclear projects in the U.K. through the Horizon Nuclear Power joint venture. RWE and E.ON instead will focus on finding a new owner for Horizon.

The German-owned companies blamed the global economic crisis, developments in the nuclear industry in Germany, and what they called the "significant ongoing costs" of running the Horizon joint venture for the decision. Both companies had been indicating recently that they also were concerned about possible cost overruns at other nuclear projects in Olkiluoto, Finland, and Flamanville, France.

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

Volker Beckers, the chief executive officer of RWE npower, said: "We remain convinced that Horizon's development projects represent excellent sites for new nuclear power stations in the U.K. It is because of the strength of support for our development work, particularly on the Isle of Anglesey, that we continue to believe that nuclear power has an important role to play in the U.K.'s future energy mix. We are therefore looking to ensure that work on development, including grid connection, can be taken up quickly by other potential investors."

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 the U.K.'s energy future."

"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," he said.

The two firms formed Horizon Nuclear Power in 2009 to develop up to 6,000 megawatts of new nuclear plants at Wylfa on the Isle of Anglesey and at Oldbury in South Gloucestershire. Horizon Nuclear Power had hoped that engineering of the £6 billion (US$8 billion) Wylfa project would begin toward the end of 2012, followed by Oldbury a year later.

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