Germany's two largest power companies joined forces yesterday and announced an ambitious plan to build at least four nuclear reactors in the UK at an estimated cost of £20 billion.

The plants, the first of which is set to enter service within ten years, will provide at least six gigawatts of new generating capacity, the equivalent of 10 per cent of the generating capacity of all Britain's existing power plants.

E.ON and RWE, which jointly operate three nuclear stations in Germany, are expected to propose building at Wylfa, on Anglesey, where RWE has recently been granted approval for a connection to the National Grid, and at Oldbury, beside the River Severn in Gloucestershire, where E.ON has obtained similar permission.

Paul Golby, chief executive of E.ON UK, said that the 50-50 joint venture would also explore the possibility of building reactors on other nuclear sites. These could include former British Energy sites such as Bradwell, in Essex, and Dungeness, in Kent, which EDF, British Energy's new owner, may dispose of in the months ahead.

The Government, which has been eager to foster competition in the market for nuclear new build after EDF's £12.5 billion takeover of British Energy, welcomed the announcement. Mike O'Brien, Minister for Energy, said that it was good news for Britain and offered proof that new nuclear plants were an attractive investment.

The joint approach would help both companies to reduce the risk and to exploit shared expertise and available funding, Dr Golby said. It could lead to the construction of nuclear plants with the same, or possibly greater, electrical power than EDF's proposal to build four new reactors on two sites formerly owned by British Energy. These are expected to be at Hinkley Point, in Somerset, and Sizewell, in Suffolk.

In a blow for Areva, the French nuclear reactor designer, E.ON and RWE backed away from a commitment to any specific technology, despite an earlier memorandum of understanding signed by E.ON to back Areva's EPR reactor design, which has been picked by EDF for the four reactors that it plans to build in Britain.

The decision represents a victory for Toshiba-Westinghouse, the Japanese-owned reactor designer, whose AP1000 is in competition with Areva's EPR. RWE is understood to be minded to back the Japanese reactor.

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