UK seen giving green light to new nuclear plants

January 2, 2008

http://uk.reuters.com/article/oilRpt/idUKL192861420080102

LONDON (Reuters) - Britain is expected to give the go-ahead to a new generation of nuclear power stations next week, sparking a frenzy of deal-making by nuclear firms as well as a fresh challenge from environmental campaigners.

"I don't think the government has any other option," said analyst David Cunningham at Arbuthnot Securities. "It's a necessary evil."

Nuclear operators say they could have new plants running by 2017, helping Britain to meet its 2020 goals for combating climate change.

The government green light, expected on Tuesday, is likely to be accompanied by publication of an Energy Bill to be fast-tracked through parliament alongside the Climate Change Bill and the Planning Bill.

The trio of bills form the backbone of the government's new energy and climate policy for the next decades.

The decision is also being closely watched by other governments, many of which increasingly view nuclear power as an essential part of the energy mix to keep the lights on and combat global warming from burning fossil fuels.

But they face varying degrees of public opposition.

While the United States is well on the way towards a new generation of nuclear plants, other countries like Germany are phasing out nuclear power because of safety concerns.

The public is divided on the issue, with 44 percent saying companies should have the option of investing in new nuclear and 37 percent disagreeing.

In February a high court judge overturned the government's initial go-ahead, saying it failed to consult the public properly.

Greenpeace says a decision in favour of nuclear next week would still be unlawful, largely because people were given flawed information in the second consultation and because there is still no plan for radioactive waste.

However, the judicial decision in February was on the basis of procedure rather than content, so a fresh legal challenge might have to follow a different tack.

BALANCE OF RISKS

But many think the government would prefer a legal challenge from environmentalists to risking missing its CO2 targets due to the unreliability of renewable energy from sources such as wind and waves and to public reluctance to cut energy use.

Main nuclear power firm British Energy is in talks with more than 10 companies to form partnerships for constructing plants, most likely in southern England.

The company is upgrading links from the UK electricity grid to its four southern sites -- Sizewell on the east coast, Hinkley in the southwest and Dungeness and Bradwell in the southeast.

If given the green light, it will form joint-venture companies with international partners, each one linked to a specific site, sources say.

"Each of those four British Energy sites has been judged to be viable, but they're not necessarily the only sites," said Tony Ward of Ernst & Young's utilities team.

He warned that with just over 30 nuclear plants under construction globally, and many more planned, utilities would have to move quickly to get themselves ahead of expected bottlenecks in the supply chain.

Business Secretary John Hutton has stressed the importance of a wide range of energy sources in recent speeches, which many interpret as a vote for new nuclear.

"He seems to be laying the groundwork for a decision," said a Greenpeace spokesman. "But he's sailing very close to the wind, as the government can't yet say it's made up its mind."