EDF was given a green light from EU regulators today to proceed with its £12.5 billion takeover of British Energy, the UK nuclear generator.

However, regulators said the deal could only progress under strict conditions, including the sale of two power stations and another site for a new nuclear reactor as well as a pledge to auction a fixed proportion of electricity to other power suppliers.

In a statement, EDF, the French state-controlled energy giant, said it had agreed to sell off British Energy’s only coal-fired power station at Eggborough in North Yorkshire as well as EDF’s gas-fired plant at Sutton Bridge.

It said it had also agreed to dispose of one of two possible sites for the construction of new nuclear power stations adjacent to existing British Energy nuclear sites - at either Heysham in Lancashire or Dungeness in Kent.

The ruling from the European Commission paves the way for EDF to take control of the bulk of Britain’s nuclear industry with the deal now expected to complete early in 2009.

But the conditions placed on the deal followed concerns that the takeover would harm competition in the UK energy industry, by creating an overly powerful player in the wholesale power market.

The agreement between EDF and the EC to auction some of its power output will allow EDF’s rivals — SSE, E.ON, N-Power, ScottishPower and Centrica as well as industrial and commercial customers — to continue buying baseload power from British Energy on similar terms to previous ones.

The sale of the power stations at Sutton Bridge and Eggborough will also loosen EDF’s grip over the market.

Electricity output from coal and gas-fired stations can be easily adjusted through the addition of more fuel, giving them greater control over wholesale pricing.

Britain’s nuclear power plants generate 19 percent of the country’s electricity. However, all but one are due to close within 15 years.

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax