June 18, 2012 / 5:08 PM / 6 years ago

Exclusive: Western firms tap China cash to bid for UK nuclear

LONDON/FRANKFURT (Reuters) - China may soon control one of Britain’s top nuclear projects after two Chinese state firms teamed up with Western players to bid for the $24 billion development, industry and financial sources told Reuters.

China, which has the world’s largest foreign exchange reserves of $3.3 trillion, has been expanding into Europe’s energy and infrastructure sectors by buying stakes in firms such as Britain’s Thames Water and Portuguese utility EDP (EDP.LS).

The British government wants to see new nuclear plants built, but cost overruns in the wake of the Fukushima nuclear disaster and the slowing global economy have made it increasingly difficult for Western developers to find the billions of dollars needed for these projects.

Nuclear reactor builders Areva AREVA.PA and Toshiba-owned (6502.T) Westinghouse, which both want Horizon to use their reactor designs in Britain, have picked separate Chinese nuclear companies to help bid for Horizon.

“Areva and Westinghouse have both assembled consortiums of their own,” said one source, who is familiar with the bidding process but who refused to be identified, while a second source in the banking sector confirmed the bidders.

German utilities RWE (RWEG.DE) and E.ON (EONGn.DE), under pressure from Germany’s decision to phase out all nuclear power, announced in March the sale of Horizon, a Gloucester-based joint venture through which they had planned to invest 15 billion pounds ($24 billion) to build plants at two UK sites in Oldbury and Wylfa, with combined capacity of at least 6 gigawatts.

Westinghouse has teamed up with China’s State Nuclear Power Technology Corporation (SNPTC), expanding their existing collaboration in China, to make a bid, while Areva has linked up with China Guangdong Nuclear Power Holding Co (CGNPC) to put forward a separate offer, the sources said.

Westinghouse, Areva and SNPTC declined to comment, and officials at CGNPC could not be reached for a reaction.

Japanese bank Nomura, which is acting for RWE and E.ON in the sales process, imposed a June 15 deadline for offers, which are expected at several hundred million pounds.

Two other groups are also believed to have expressed an interest, with Japanese-U.S. joint venture GE Hitachi (GE.N) a likely candidate, one of the sources said.

GE Hitachi refused to comment.

The group has previously said it was interested in the UK nuclear market and that it planned to submit an application for design approval of its ESBWR reactor in the UK. [ID:nL5E7KF383]

    Last year, SNPTC and Westinghouse extended by two years a partnership in China to build the U.S.-based firm’s AP1000 nuclear reactor.

    CGNPC chose Areva’s EPR design for its Taishan nuclear power plant in China, and the two companies have founded an engineering joint venture in China.

    Both the AP1000 and EPR designs have reached the final stages of regulatory approval in the UK.

    Britain is trying to woo nuclear investors by reforming its electricity market in a way that guarantees a minimum price for producers of low-carbon energy, including nuclear power.

    Energy Minister Charles Hendry last month called Horizon’s nuclear sites at Wylfa and Oldbury two of the most attractive sites in Europe to invest in new nuclear, adding that there had been strong interest in buying the joint venture.

    In a separate project, French utility EDF (EDF.PA) and Areva, together with junior partner Centrica (CNA.L), are planning to build four EPRs in Britain, and a final investment decision for the first plant at Hinkley Point in Somerset is expected later this year. ($1 = 0.6382 British pounds) (Additional reporting by Jonathan Gould in Frankfurt, Caroline Jacobs in Paris and Wan Xu in Beijing, editing by Jane Baird)

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