French nuclear rivalry may hamper UK energy plans

Monday, July 7, 2008

France's two biggest energy groups, EDF and GDF Suez, are vying to build the country's latest nuclear power plant, casting fresh doubt on their participation in Britain's planned nuclear renaissance.

Last week President Nicolas Sarkozy gave the go-ahead for a second new-generation European pressurised reactor (EPR) on an existing site. It will be France's 60th nuclear power plant.

State-owned EDF said immediately it was ready to take part in the project in view of the increased demand for electricity and constraints imposed by global warming, and said it owned several potential sites for the new reactor.

GDF Suez indicated its interest but said it would decide by early 2009 at the latest. Analysts said it is certain to go ahead given its plans to extend its nuclear presence from Belgium to France.

EDF, which is helping to build France's first EPR at Flamanville on the Normandy coast, is still said to be considering whether to increase its rejected offer to buy British Energy, Britain's main nuclear power operator. Industry sources say its interest is waning, given that BE shareholders want much more than EDF's indicative offer of 680p a share. EDF is thought unwilling to go much above 700p.

The French group is the only player left in the running to acquire the government's 35% stake in BE after Suez, Spanish group Iberdrola and Germany's RWE withdrew from the bidding process. It has been talking with Centrica, owner of British Gas, about the UK group's role in the process.

The British government, already facing delays to its planned nuclear new-build programme because of skills shortages, could meet further setbacks if the BE sale fails to materialise.

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