Power companies are considering the future of energy supply in the UK after the Government paved the way for a new generation of nuclear power stations.

The long-awaited Energy Review put nuclear power back on the agenda as the UK battles to cut carbon emissions and reduce its reliance on imported gas.

Analysts said it could lead to the building of ten new nuclear reactors at a cost of around pounds 20 billion, although the Government indicated it will not subsidise the programme.

That has left the giants of the nuclear industry and major utilities firms weighing up their options as they consider how best to deliver nuclear power - and how much it will cost.

The review also pointed towards the need for more renewable energy such as wind, wave and solar, as ministers said they wanted a mix of clean, low-carbon sources to power the UK, which could benefit companies such as Scottish Power and Scottish & Southern Energy.

British Energy wants to be considered as a future operator of the new generation of nuclear power stations saying it has "the sites and the people and the skills".

It already meets around a fifth of the UK's energy from its portfolio of nuclear reactors - including at Hinkley Point in Somerset, Hunterston in Ayrshire, Sizewell B in Suffolk, and Torness in East Lothian -but this will drop to six per cent by 2020 as the sites reach the end of their life.

Importantly, British Energy owns the power stations and the land around them and the Government has indicated that it would prefer the new generation of reactors to be built on current sites.

Analysts believe this could prove to be a boon for the group, although it may be hit by the need to open up the market to competition.

Keith Bowman, of Har-greaves Lansdown Stockbrokers, said: "British Energy could be a big beneficiary, although while its current experience in the field bodes well, the need to try and create a competitive environment might work against the group.

"That said, despite all the comment regarding speeding up the planning process, any future nuclear plants are likely to be situated near existing ones and British Energy, given its land bank surrounding existing plants, looks to hold many of the key playing cards."

However, question marks remain over British Energy's ability to pay for new nuclear reactors after it was rescued from financial ruin by the Government in 2003.

The story of British Energy may also act as a warning to other potential operators after the Government made it clear that the private sector will have to bear all the commercial risk, including the cost of decommissioning and waste-management.

Andrew Fisher, head of equity analysis at Barclays Stockbrokers, said: "It seems that the private sector would be expected to stomach most of the risk.

"Whilst the pricing environment for nuclear is currently supportive, the high fixed costs involved exposes the technology to weaker electricity prices, plus construction and operational risks, which means that the longer-term economics may not support a wholly- private sector funded investment."

A number of foreign firms are expected to enter the fray with operators in continental Europe more accustomed to nuclear power than many of their counterparts in the UK.

Germany's two biggest utilities RWE and Eon are thought to be interested while

French firm EDF Energy is another likely candidate.

Mr Bowman said: "Many of the potential operators are likely to come from continental Europe where nuclear power is generally more accepted and certainly more utilised than in the UK at the present time.

"Two German energy groups, RWE and Eon, both of which have major Midlands operations via their ownership of former English generators National Power and Power-gen, appear well positioned.

"French energy concern, EDF Energy, which currently operates three generating plants in the UK along with a number of wind farms, also looks to be a potential beneficiary.

"All have good experience of nuclear generation back in their respective home markets. From a UK investors' point of view, unfortunately all are listed overseas."

EDF boss Vincent de Rivaz welcomed the Energy Review and said it put the firm "a step nearer" to making its decision on whether to invest in nuclear power in the UK.

But like other firms, he warned that this was just the start of the process and a lot of work needed to be done before EDF would commit.

Powergen owner Eon called for a "streamlining of the planning process" to ensure nuclear power stations could be built efficiently.

Chief executive Dr Paul Golby said he did not want "a repeat of Sizewell B" where it took five years.

A company spokesman added: "The Government has come up with some nice words but has not put meat on the bone.

"What happens to the waste? Where will the stations be built? What sort of reactors will we have?

"We will definitely join the early process but it is just too early to say whether we will build or not."

And British Gas owner Centrica said more gas-fired power stations were needed as it was unrealistic to expect any new nuclear power stations to be built before 2015.

Mr Bowman said: "Overall, while momentum towards nuclear power has been increased thanks to the recent policy review, a great many uncertainties as to the process of implanting atom power remain and potential stock-market winners and losers are difficult to predict when so much could change."

British Energy could be a big beneficiary, given its land bank surrounding existing plants' it looks to hold many of the key playing cards

Keith Bowman