Separation paves way for new competitors to enter the market.
German energy giants E.ON (IW 1000/18) and RWE (IW 1000/45) on March 29 pulled out of their British nuclear power joint venture, paving the way for new entrants into the market, according to the government.
The two companies said in a statement that they would not proceed with the Horizon Nuclear Power project, which had hoped to develop nuclear reactors at Wylfa in north Wales, and at Oldbury-on-Severn in southwest England.
"Following a strategic review, separately carried out by both parent companies, RWE npower and E.ON UK said today that they would not proceed to develop new nuclear power projects in the United Kingdom through the Horizon joint venture," the statement said.
"RWE and E.ON will now focus on finding a new owner for Horizon Nuclear Power. Both parties will endeavor to ensure that Horizon's assets and work on development can be taken up quickly by other potential investors."
RWE explained that a number of factors had changed since the formation of Horizon 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," it said.
In addition, in view of the accelerated nuclear phase out in Germany, RWE has been forced to rethink its strategy, sell-off businesses and boost capital.
"A combination of these strategic factors, together with the significant ongoing costs of running the Horizon joint venture, has led to a situation where capital investment plans have been reviewed," it said.
E.ON UK chief executive Tony Cocker added that E.ON wanted to focus on other more short-term strategic projects that delivered quicker benefits.
Last year, Britain gave the green light to eight sites, including Wylfa and Oldbury, for a new generation of nuclear reactors, which ministers say are needed to reduce carbon emissions and meet energy needs.
The sites included French energy giant EDF's plans for two reactors at Hinkley Point, western England; and a NuGeneration scheme in Cumbria in the northwest that is backed by both GDF Suez and Iberdrola.
The go-ahead was also given for plans at Bradwell, east of London; Hartlepool in northeast England; Heysham in the northwest and Sizewell in the east of the country.
Britain's coalition government expressed disappointment at Thursday's announcement, but added that it provided an "excellent" opportunity for new entrants in the market.
"E.ON and RWE's withdrawal is clearly very disappointing, but the partners have clearly explained that this decision was based on pressures elsewhere in their businesses and not any doubts about the role of nuclear in UK's energy future," said energy minister Charles Hendry.
"The UK's new nuclear program is far more than one consortia and there remains considerable interest.
"Plans from EDF/Centrica and Nugen are on track and Horizon's sites offer new players an excellent ready-made opportunity to enter the market," he added.
In a separate statement, EDF and Centrica said that they remained committed to their plans to build two reactors at Hinkley Point.
Unlike Germany and Italy which decided to abandon nuclear power after Fukushima, the government of Prime Minister David Cameron is pushing ahead with it while adopting tighter safeguards in light of the Japanese nuclear crisis.
Britain currently has 10 nuclear power stations with 19 reactors, producing nearly a fifth of the country's electricity.
Copyright Agence France-Presse, 2012