E.ON, the German energy group, is drawing up plans to build a £4 billion nuclear power station beside the River Severn in Gloucestershire.

The company has applied to National Grid for a connection that would allow it to build a 1,600 mega-watt nuclear station at Oldbury-on-Severn by April 2020.

National Grid has granted permission for the link to a site that is next to an existing station owned by the Government through the Nuclear Decommissioning Authority (NDA). It hosts two 225 MW Magnox reactors that have been operating since 1967 and are scheduled to be retired from service at the end of the year.

E.ON’s interest in the site has emerged amid expectations that EDF, its French rival, is on the brink of acquiring British Energy (BE), the UK’s largest nuclear generator, for about £12 billion. The deal would give it control of most of the preferred sites for new British nuclear stations.

It also comes as the NDA said yesterday that it was putting three sites up for sale, including one at Oldbury, to potential developers of new nuclear plants.

E.ON is expected to submit a bid to buy the site at Oldbury, although a spokeswoman insisted that the company’s interest was only preliminary.

The NDA sites represent the best alternative to those owned by BE. New nuclear stations are likely to be built on or next to existing sites.

E.ON has said that it wants to build two new nuclear stations in Britain to a French reactor design made by Areva. Wulf Bernotat, E.ON’s chief executive, told The Times this year that each one was likely to cost between €5 billion and €6 billion (£4 billion and £4.8 billion) to build.

The other NDA sites put up for sale yesterday were Wylfa, on Anglesey, and Bradwell, in Essex.

The NDA is also studying which parts of the Sellafield site in West Cumbria it could sell for the development of new nuclear stations.

The expected sale of BE to EDF will give the French company ownership of the lion’s share of sites for new nuclear facilities in Britain. Takeover talks are continuing and one of two rebel BE shareholders, Invesco, the fund manager, is understood to have been persuaded to back the deal. Sources believe that a successful takeover could be announced as early as next week.

Separately, E.ON courted controversy yesterday, when one of its executives joked that if soaring energy prices continued it would “make more money for us”.

The quip was made by Mark Owen-Lloyd, head of power trading at E.ON, at a seminar hosted by Ofgem on gas prices, and was later condemned by Energywatch, the watchdog. A spokesman for E.ON said that the remarks were “wholly inappropriate” and offered the company’s apologies.

Generation gap

— Britain's ten nuclear stations generate 15 per cent of the UK's electricity

— The Government wants to raise this to 40 per cent by building 20 new reactors

— All but one of the existing plants are due to be retired by 2023

— E.ON's proposed station at Oldbury would enter service in 2020 and would generate 1,600 megawatts of power

— EDF wants to build four stations at sites owned by British Energy

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