Iberdrola, the Spanish energy group, was understood last night to be putting the final touches to a bid for British Energy, the nuclear generator.

Iberdrola, the owner of ScottishPower, is expected to submit an offer before a deadline set for tomorrow by Rothschild, the investment bank handling the sale.

The board of EDF, the French state-controlled energy company, also met yesterday to give a green light to a solo bid for the company. Both companies are expected to submit initial bids of between 600p and 700p per share, valuing British Energy at more than £9.6 billion. Its shares closed up 16½p at 734p yesterday.

RWE, of Germany, is also a possible bidder, while Centrica, the British Gas owner, is still seeking a role, possibly as a junior partner. Centrica, which lacks its own power-generating capacity but cannot afford to bid alone, is eager to strike a long-term deal to buy power or secure access to one or more sites from the successful bidder.

Sources close to the negotiations said that tomorrow was only a preliminary deadline for bidders to provide details of financing arrangements.

British Energy, whose eight ageing reactors generate roughly a fifth of the UK’s electricity, is viewed as a key player in the race to build a new generation of reactors because it owns access to most of the key sites.

Spokesmen for EDF, Centrica and Iberdrola declined to comment.

The auction for British Energy has been plagued with problems. Last month, British Energy’s largest reactor at Torness, near Edinburgh, broke down, undermining confidence in the group’s assets. The 625-mega-watt reactor was shut down again yesterday, a week after reopening.

One potential bidder, Vattenfall, has pulled out after pressure from the Swedish Government, which has banned new nuclear development in Sweden.

The Government owns 35 per cent of British Energy and its advisers have emphasised that no bid would be blocked on the ground of nationality.

However, it is understood that the Government is keen for whoever wins the auction to sell some sites to a rival to ensure that the future of Britain’s nuclear industry does not lie in the hands of one company.

One source said that Iberdrola was sounding out potential partners while working on its own solo bid.

Last month, Iberdrola reported that first-quarter profits had risen 162 per cent to €1.2 billion and also raised €1.75 billion in a bond placement.

The company said that the bond issue would allow it to continue with a €24.2 billion investment programme set out in its 2008-10 strategic plan.

The Spanish company bought ScottishPower for £11.6 billion at the end of 2006.

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