Britain needs France for nuclear future

By Daniel Fineren - Analysis

LONDON (Reuters) - French power giant EDF's expected takeover of British Energy is the best way to secure Britain's nuclear future but could reduce competition in the power market.

The 12 billion pound deal, expected to be announced on Friday, will see Britain's biggest power producer swallowed by Europe's largest generator just as fears of market concentration are growing because of rising energy prices.

But it is also the best hope the British government, which owns 35 percent of the target company, has of replacing the country's ageing reactors.

"Britain has decided that it wants to go down a nuclear route and we have systematically closed down our nuclear industry over the last 15 or 20 years," Professor of Energy Policy at the University of Oxford, Dieter Helm, said.

"Since we now want to have a nuclear new build programme there is a sense of inevitability that effectively we are going to have to hand our programme over to the French."

State-run EDF, which sources say has agreed a bid of around 775 pence a share, has built dozens of reactors across France over the last 30 years, and is constructing one at Flamanville.

Its European Pressurised Reactor (EPR) is one of three designs that could be used to build the next generation of power stations in Britain and the company has the money to do it.

EDF needs the land around British Energy's eight nuclear power plants in England, Scotland and Wales to build them on, but analysts say that's all British Energy -- which had hoped to play a key role in the new build programme -- has to offer.