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A blow for nuclear strategy but not a meltdown

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The government is announcing UK's biggest ever contract to demolish a nuclear plant, but this isn't the end of nuclear power

On Monday a cabinet minister will attend a significant nuclear announcement: not the opening or building of a new plant, though; the UK's biggest ever contract to demolish one.

It is tempting to portray the event to mark the final closure of Dounreay as symbolic after the announcement on Thursday that the two German energy companies E.ON and RWE were pulling out of one of the country's biggest nuclear building projects, the second such decision in recent months. But are commentators right to suggest the country's policy has been plunged into disarray?

E.ON said the decision to sell its 50% stake in Horizon Nuclear Power, which is building nuclear reactors at the Wylfa plant in north Wales and Oldbury, Gloucestershire, followed a strategic review, and it hoped to find new owners for the venture. "We believe that for the right company Horizon remains an attractive project," added Tony Cocker, chief executive of E.ON UK.

Charles Hendry, the energy minister, moved quickly to reassure the wider industry, saying: "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. Horizon's sites offer new players an excellent ready-made opportunity to enter the market."

In its favour, new nuclear power has had support from the coalition and the previous Labour administration, as well as an increasingly vocal faction of the environment movement, which traditionally led opposition.

The government is also deciding what to do with nuclear waste in England, and appears to have found a financial support mechanism to get around the repeated promise not to give subsidies to the nuclear industry by offering a guaranteed minimum price to all low carbon energy.

Just last month it appeared to be riding a high when David Cameron visited France and signed a civil nuclear co-operation pact which included a commitment from the French firm EDF to set up a £15m training centre in Somerset to prepare workers to build a new generation of power plants.

E.ON and RWE's decision will be partly blamed on an anti-nuclear backlash in Germany over the continuing danger of high level radiation leaking from the Fukushima nuclear plant in Japan following the factor-9 earthquake last year.

Robert Gross, an energy policy expert at Imperial College London said other concerns could have been delays in projects in Finland and France, and "possibly wavering" by the UK government over its commitment to low carbon energy after high profile political questions over wind farms and a marked increase in support for building new gas turbines.

"I can imagine a scenario where gas prices have [dropped] and nuclear was falling behind and very big, and the whole thing started to look rather unattractive," he added.

It is too soon to dismiss the nuclear strategy with all parties committed to cutting carbon emissions by 80% by the middle of this century, and plans for more nuclear new build when the first new reactors have been commissioned and built.

But the announcement will be a reminder to ministers that they cannot be complacent about their commitment when relying on private money to build essential national infrastructure.


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