GE, Hitachi plan venture for nuclear power pacts

U.S. conglomerate General Electric Co. and Japan’s Hitachi Ltd. said Monday that they planned to pool their nuclear units in a $2-billion enterprise they hoped would capture more contracts as power suppliers gear up to build a new generation of plants.

The two companies, which already have a joint venture for nuclear fuels, have also teamed up on a bid to build a nuclear power plant that merchant power company NRG Energy Inc. aims to build in Texas. That could be among the first new nuclear plants ordered in the United States in three decades.

They said their alliance comes at a time when demand for nuclear power is ramping up in the United States, as volatile oil and natural gas prices make nuclear a more appealing power source.

“To maintain the ratio of nuclear [power] generation to the total in the United States of roughly 20%, it’s going to require roughly 20 plants to be built over the next decade or so,” said John Krenicki, president and chief executive of GE Energy.

The deal will create two companies, one focused on Japan and 80% owned by Hitachi, and another serving the rest of the world and 60% owned by GE. Krenicki said that when the deal closes an undetermined amount in the “hundreds of millions” of dollars would be paid to GE.

“Energy is a pretty important long-term story in general and this is certainly one of the trends that is going to be getting increasing attention in the next 10-15 years,” said Peter Smith, equity analyst with Morningstar in Chicago, who follows GE. “This is an area that they need to be playing in to a greater extent.”

The partnership would help Hitachi, Japan’s biggest electronics conglomerate, turn its nuclear power business around and help it get more boiling water reactor contracts abroad, Hitachi said.

Hitachi President Kazuo Furukawa said the company aimed to win contracts to build at least a third of the 25 nuclear power plants the U.S. Department of Energy hopes to have built by 2020.