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Nuclear Power

German energy giants back out of UK nuclear venture

German utility companies E.ON and RWE have announced their decision to pull out of their British nuclear power joint venture. They will not build new nukes in the UK, citing a shaky business climate in the sector.

German energy giants E.ON and RWE said on Thursday they had made up their mind to withdraw from their joint venture with Britain. The two companies announced in a statement that their pullout from Horizon Nuclear Power was based on a strategic review carried out separately by the two utility firms.

Initially, Horizon hoped to have capacity of around 6,000 MW of nuclear power by 2025, requiring investment of more than 15 billion pounds (17.5 billion euros, $23.31 billion). Horizon forecast that each new nuclear power station would create some 800 permanent jobs, with up to 5,000 people in employment in the construction period.

The two German companies said in a joint statement, "RWE and E.ON will now focus on finding a new owner, and both parties will endeavor to ensure that Horizon's assets and work on development can be taken up quickly by other potential investors."

Worsening framework

RWE cited a number of factors that had changed since the joint venture was set up in 2009. "The global economic crisis has meant that capital for major projects is at a premium and nuclear power projects are particularly large-scale, with very long lead times and payback periods," the statement said.

It also pointed to the accelerated nuclear phase-out in Germany which had made RWE rethink its strategy, sell off businesses and boost capital. E.ON Chief executive Tony Cocker argued in a similar vein, saying that his company would focus its investment in the UK on other strategic projects that would allow the firm to deliver earlier benefit for customers.

British Energy Minister Charles Hendry regretted the pullout, saying the move was "very disappointing." Two years ago, RWE withdrew from a nuclear project in Bulgaria, followed by a similar pullout from Romania in early 2011.

hg/mll (Reuters, dapd, AFP)