E.ON and RWE pack it in for Wylfa and Oldbury

Two of Germany’s biggest nuclear utilities slated to build Westinghouse 1100 MW AP1000 nuclear reactors at two sites in the U.K. have packed up and gone home. E.ON and RWE announced today (March 29) they will not be carrying out business plans worth an estimated $24 billion to build nuclear power stations in the U.K.

The companies said in a joint statement that the “accelerated nuclear phase-out” in Germany has led to a decision to pull back from a number of international investments.

Last year Germany closed eight of its oldest nuclear reactors and scheduled to close the remaining nine by 2022. The two utilities are hard hit by these moves as the reactors were essentially depreciated cash cows that would have provided money for international expansion projects. E.On said in its financial statements it suffered a 50% decrease in profits due to the closure of the older reactors.

Both utilities said they would begin seeking a new owner for the 50-50 joint venture in the U.K., called Horizon Power, that was set up in 2009. The purpose of the new firm was to build new reactors on the island of Anglesey and at Oldbury in Gloucestershire.

In addition to blaming the closure of their reactors in Germany, the two utilities said that the global economic crisis made it harder to raise capital for large, long-term investments like nuclear reactors.

One hurdle too many?
The U.K. government was taken by surprise by the announcement and some analysts said that the decision of the German utilities to pull out was a set back for the U.K. new build. It raises questions about energy security for the U.K.

The government had hoped that by offering long-term contracts that would pay steady rates that it could overcome the risk issue for investors in new reactors.

It set its hope on construction of new reactors at eight sites and involving as many as 12 reactors for about 17-19 Gwe of new electricity generation. The German utilities had planned to build 4.5 Gwe of power.

Westinghouse said in a statement issued from its offices in Pittsburgh, PA, that it was “disappointed” with the decision. The firm emphasized that new nuclear plants are “hugely important” to the U.K. economy. Thousands of construction jobs were riding on the plans to build the new reactors.

Westinghouse may have sensed something was up because it did not proceed with the final, and expensive, stages of the general design assessment for its AP1000 reactor in the U.K. The firm said last year it would do so when a customer placed an order.