Nuclear energy in the UK is poised for a revival, with the news that the government’s 35.2% stake in British Energy, owner of most of the UK’s nuclear power plants, was up for sale appearing to mark the first meaningful development in the sector for decades.

However, this is misleading, according to Tony Ward, utilities director at Ernst & Young. If anything, the British Energy sale marks an end-point in the process.

Nuclear currently provides 20% of UK electricity but by 2023 all but one of the country’s reactors are due to have shut (almost one third of generating capacity of all types is set to go offline by 2020, according to analysts at Innovest Strategic Investors).

The company has been talking to utilities for almost a year about building new reactors while government policy on nuclear energy became bogged down in a court case with Greenpeace. With those issues seemingly resolved, the stage is set for a resurgence of nuclear power in the UK.

Carbon case

From a carbon point of view, the argument for nuclear is compelling. Torness nuclear power station in Scotland emits around 6g of CO₂ per KW/h, comparable to the figure for onshore wind, according to British Energy’s Sue Fletcher. By contrast, a typical gas-powered station emits 400g per kW/h and a coal-fired one about 900g per kW/h.

Rising fossil fuel costs and the establishment of a carbon price improve the economics as well. While nuclear power stations are far more expensive to build than gas-fired installations, their operational costs – including the costs of disposing of the waste – are much lower, making their running costs over the entire lifetime of the plant much cheaper, Ward says. The operators of the new plants will put aside funds from their profits to pay for dealing with the new waste generated. The old waste is being dealt with by the Nuclear Decommissioning Authority and, although it would be technologically feasible, there are no plans under any of the current proposals to use reprocessed waste in the new reactors.

In addition, in a world where increasing amounts of intermittent renewable energy will be coming on stream, “nuclear is the only scaleable, low-carbon option for base-load power”, he adds. The Planning Bill, which is currently going through Parliament, should make it easier to get approval for large infrastructure projects such as nuclear power plants. The bill should make it more difficult for opponents to drag out planning inquiries by addressing national strategic issues such as whether nuclear power is needed or questions over the various types of technology.

Tired of British Energy

According to the government, the talks on developing new reactors generated more interest than the government expected and led it to consider selling down its stake. Energy groups RWE, Eon, Centrica, Iberdrola and EDF were all approached by bankers to see if they would be interested in buying part of the government’s share of BE (takeover rules mean that buying the whole stake would automatically trigger a bid for the whole company). The preliminary deadline for bids is tomorrow.

RWE of Germany reportedly made a £11bn bid for the whole company, whilst Centrica, the owner of British Gas, is said to have made a £10bn all-share offer and also to have mooted a joint bid with EDF and RWE. Although Centrica lacks nuclear experience and is not thought to have the resources to execute a full bid on its own, its presence as a joint venture partner could ease concerns in some quarters over foreign ownership and a concentration of nuclear capacity in the hands of one owner. Iberdrola is also in the running for a joint bid.

Sites of interest

The main attraction of British Energy is not its current capacity. Although that is making good profits because of high fossil fuel prices and it would improve any of the bidders’ carbon profiles, it has been dogged by safety concerns. Innovest analyst Daniel Bida says BE’s prime selling point is its ownership of four prime sites for new reactors – situated next to existing reactors which are due to be phased out – along with the necessary permits and approvals for construction and transmission connection agreements. “The approval process for new sites is extremely lengthy and arduous as it requires dealing with various levels of government as well as local communities,” says Bida. “The fact that BE’s sites are already approved makes them all the more valuable.”


Buying into BE is not a prerequisite for building new nuclear capacity in the UK – the Nuclear Decommissioning Authority also has sites available that would be suitable for new power stations. “While we have no role in encouraging nuclear new-build, we do have sites that are suitable for that purpose,” says the NDA’s Bill Hamilton.

Waste and safety

One of the main fears for opponents of the industry remains the problems over safety and waste disposal. Yet Ward claims the industry is totally different now. “The waste we are dealing with now is a legacy of the very early stage technology the UK chose in the 1950s and 1960s and of the country’s military nuclear programme. The technology used in modern reactors is completely different and produces far less waste that will be far easier to deal with.”

These figures were submitted to the government’s Energy Review by the reactor manufacturers. They claim that if the same amount of nuclear capacity as currently exists were built – and run for 60 years – it would generate about 10% of the waste the current reactors will have done by the time they close. This is partly because there will be no research or military activity and partly because the new reactors simply have much smaller reactor cores, so they use less nuclear material.

While there remains significant (although weakening) opposition to building new nuclear power stations in the UK, it seems likely that it will happen, whatever happens to British Energy.