Iberdrola, the Spanish utility that owns ScottishPower, is in talks about entering a joint venture with British Energy to build a nuclear power plant in Britain.

A spokesman for Iberdrola in Madrid confirmed yesterday that talks were taking place but declined to provide further details. The companies are believed to be discussing construction of a 1,600-megawatt plant in southern England at an estimated cost of about €2.8 billion (£2.1 billion).

British Energy, which is 35 per cent owned by the State, is set to play a key role in any push to build nuclear power stations in Britain because it owns eight of the ten existing UK nuclear generation sites, on which replacements are likely to be built. The most likely sites for new stations are thought to be Sizewell, in Suffolk; Hinkley Point, Somerset; Bradwell, Essex; and Dungeness, Kent. All are in southern England, where demand for power is highest.

A spokeswoman for British Energy declined to comment, saying only that the company was in talks with a variety of partners, including British and international utilities and financial institutions, about possible collaboration opportunities. She said that British Energy planned to update the market at the end of March on the status of the talks.

International and British utilities are interested in participating in a drive to build a new generation of nuclear plants, a plan that was given government backing last week in an energy White Paper, which concluded that nuclear power would form a key part of future British energy policy.

Last week, Areva, the French energy company, said that it wanted to build six plants, with the first to be opera-tional by the end of 2017. Four would be in partnership with EDF, another French company, and the other two with different partners.

Centrica, the owner of British Gas, also expressed an interest in a new plant and the German companies E.ON and RWE, which own Power-gen and npower in Britain, are likely to want to be involved. Other nuclear plant builders, such as GE-Hitachi, Toshiba-Westinghouse, and utilities such as Scottish and Southern Energy and Vattenfall, of Sweden, are also interested.

The Government has estimated that each plant would cost about £2.8 billion to build, but the cost could run to as much as £3.6 billion.

Significant other costs will also arise from upgrades to the British transmission network and for the disposal and decommissioning of waste and new reactors.

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