British Energy to Extend Life of 2 Nuclear Reactors
Date: 12-Dec-07
Country: UK
Author: Pete Harrison
The Hinkley Point reactor in Somerset, southwest England, and the Hunterston reactor on Scotland's west coast had been scheduled to close in 2011, 35 years after they were first fired up.
Chief Executive Bill Coley said those who thought the life extensions might rule out the need for a generation of new reactors were mistaken, however.
"It doesn't obviate the need for new capacity, but it makes the timing more manageable," he told Reuters.
British Energy runs eight UK reactors, generating about one-sixth of the nation's electricity.
The UK government will decide next month whether to give the controversial go-ahead to a new generation of reactors after years of limbo in the wake of the 1986 Chernobyl disaster.
If it does, it will join Russia, India, China and the United States in a global renaissance for the industry as the world seeks to wean itself off climate-damaging fossil fuels.
Coley said the life extensions would prevent the emission of 37 million tonnes of CO2, which would have otherwise been generated by power plants filling the gap -- equivalent to about half the annual emissions of a country like Portugal.
The company expects to spend an additional 90 million pounds (US$183.6 million) in the three years to 2008 to get Hinkley Point and Hunterston ready.
"We see this capex not just as supporting this life extension but also paving the way for further life extensions post-2016," said analysts at Deutsche Bank. "Their life extension is encouraging for the other plant too."
All except one of British Energy's ageing reactors are built to unique UK gas-cooled designs, but any new generation would almost certainly be pressurised water reactors of an international design.
Coley said the group was still in second-round talks with more than 10 companies that are interested in playing a part in any new UK nuclear plants, and no party had been eliminated yet.
"Interest and enthusiasm is even higher now than when we began the whole process," he added.
British Energy is currently running Hunterston and Hinkley Point at reduced capacity of 60 percent after shutting them down last winter to repair boiler cracks.
It hopes to get them up to 70 percent over the next year, at which point it needs a power price of around 27 pounds per megawatt hour to make the life extensions economically viable, well below the current baseload price of around 55 pounds.
Analysts at Citi noted that 2008/09 would be the fourth year British Energy has spent around 300 million pounds on its stations and it now looked unlikely that would ever fall back to the group's 170 million-a-year goal.
"We will likely need to raise our 2008/09 capex by some 50 million pounds, which may imply some downside risk to earnings for 2009/10," they added.
(Additional reporting by John Bowker; Editing by Will Waterman and Quentin Bryar)
