European utilities say new nuclear in UK a "tough proposition"

Amsterdam (Platts)--6Dec2006

Two European energy producers Wednesday cast doubt on construction of a
new generation of nuclear plants in the UK even if a pro-nuclear government
eases the way for new projects.
"It looks to us a very tough proposition even if planning is fixed,"
Gearoid Lane, director of gas and electricity procurement at UK utility
Centrica, said at International Center for Business Information's Sparks and
Flames conference in Amsterdam.
The UK's Labor-led government has outlined a long-term energy strategy
that calls for replacement of the current, ageing fleet of reactors. But a
lack of certainty - about European-wide carbon prices and the bureaucratic
process to win approval for new construction - are major impediments.
The carbon prices will affect the cost of producing power with other
fuels, such as coal, and the planning process will affect the time and expense
of developing nuclear projects.
Lane said that even with greater certainty, new construction remained
more costly and required more time to build than other technologies, making
investment a difficult sell to the corporate boards that would approve such
projects.
He did not say Centrica had dismissed nuclear build, and acknowledged
that the company, formerly British Gas, was a nuclear "rookie."
"We are trying to wrap our minds around the issues," Lane said.
But Lane was not the only nuclear skeptic.
Marc Hall, vice president of corporate strategy at Germany's RWE Energy,
said companies also had to consider the vagaries of electoral politics when
planning long-term projects.
"Even if you have a government that who is pro-nuclear power, I think
long-term investors and producers will take into account that governments
change," Hall said.
Not all assessments were pessimistic, however.
Sonia Brown, director of wholesale markets at the UK Office of Gas and
Electricity Markets, said investors may decide in favor of nuclear investment
if the planning process is improved and barriers to new construction are
removed.
"I think nuclear is a viable technology," Brown said.

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