GE, Hitachi set to get NRG nuclear facility order

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TOKYO, June 23 (Reuters) Hitachi Ltd. said on Friday U.S. merchant power company NRG Energy Inc. is set to pick Hitachi and General Electric Co. to build nuclear power facilities for .2 billion, in what would be Hitachi's first major overseas nuclear power project.

Nuclear power has been out of favour due to concerns about security and the financial and environmental costs of dealing with radioactive waste.

But Japanese companies are moving deeper into the industry as oil prices and global energy demand soars and fuel-hungry countries such as China expand investment in various energy sources including nuclear power.

Hitachi rival Toshiba Corp. agreed in February to acquire Westinghouse, the U.S. power plant arm of British Nuclear Fuels Ltd, for .4 billion.

Shares in nuclear power-related firms such as Hitachi Plant Engineering&Construction Co. Ltd., a Hitachi unit in charge of installation work for nuclear power plants, and Okano Valve Mfg.

Co. shot up on Friday.

Shares of Hitachi, whose nuclear business accounts for about 2 percent of its total revenues of billion, ended flat.

But analysts say the news underscores resurging interest in nuclear power among U.S. power firms, boding well for plant makers including Hitachi and Toshiba.

''Some pundits say 60 fresh nuclear reactors will be built in the United States as we go forward. Others say 200. Each new reactor means an order worth about 300 billion yen ( TOKYO, June 23 (Reuters) Hitachi Ltd. said on Friday U.S. merchant power company NRG Energy Inc. is set to pick Hitachi and General Electric Co. to build nuclear power facilities for $5.2 billion, in what would be Hitachi's first major overseas nuclear power project.

Nuclear power has been out of favour due to concerns about security and the financial and environmental costs of dealing with radioactive waste.

But Japanese companies are moving deeper into the industry as oil prices and global energy demand soars and fuel-hungry countries such as China expand investment in various energy sources including nuclear power.

Hitachi rival Toshiba Corp. agreed in February to acquire Westinghouse, the U.S. power plant arm of British Nuclear Fuels Ltd, for $5.4 billion.

Shares in nuclear power-related firms such as Hitachi Plant Engineering&Construction Co. Ltd., a Hitachi unit in charge of installation work for nuclear power plants, and Okano Valve Mfg.

Co. shot up on Friday.

Shares of Hitachi, whose nuclear business accounts for about 2 percent of its total revenues of $82 billion, ended flat.

But analysts say the news underscores resurging interest in nuclear power among U.S. power firms, boding well for plant makers including Hitachi and Toshiba.

''Some pundits say 60 fresh nuclear reactors will be built in the United States as we go forward. Others say 200. Each new reactor means an order worth about 300 billion yen ($2.59 billion),'' Mizuho Investors Securities analyst Yuichi Ishida said.

''They can expect an increase in orders as energy demand expands.

This is substantial.'' NRG will build two advanced boiling water reactors (ABWR) in Texas as part of a $16 billion investment to create 10,500 megawatts of new U.S. electricity generation.

ABWRs are based on a technology that has been used in Japan but not yet in the United States even though it has been approved by the U.S. Nuclear Regulatory Commission. ABWRs and boiling water reactors (BWR) compete with pressurised water reactors (PWRs).

Hitachi, Japan's largest electronics conglomerate, noted that NRG already operates two PWRs at the site in Texas, but decided to switch to ABWRs for new plants. Westinghouse specialises in PWRs.

Construction is slated to start in 2009 and the facilities are expected to begin operations in 2014.

''The timing couldn't have been better since our domestic nuclear projects are set to peak in 2010 for now. This will help us keep going,'' a Hitachi spokesman said.

Hitachi is expected to provide key equipment, while GE is likely to be in charge of fuel procurement and negotiations with the U.S.

government, making the alliance complementary, the spokesman said.

Key nuclear plant equipment includes reactors and turbines.

Shares in Hitachi ended trade flat at 744 yen, in line with Tokyo's electrical machinery index. Hitachi Plant gained 6.9 percent to 669 yen while Okano Valve rose 7.6 percent to 598 yen.

REUTERS CS DB1818 .59 billion),'' Mizuho Investors Securities analyst Yuichi Ishida said.

''They can expect an increase in orders as energy demand expands.

This is substantial.'' NRG will build two advanced boiling water reactors (ABWR) in Texas as part of a billion investment to create 10,500 megawatts of new U.S. electricity generation.

ABWRs are based on a technology that has been used in Japan but not yet in the United States even though it has been approved by the U.S. Nuclear Regulatory Commission. ABWRs and boiling water reactors (BWR) compete with pressurised water reactors (PWRs).

Hitachi, Japan's largest electronics conglomerate, noted that NRG already operates two PWRs at the site in Texas, but decided to switch to ABWRs for new plants. Westinghouse specialises in PWRs.

Construction is slated to start in 2009 and the facilities are expected to begin operations in 2014.

''The timing couldn't have been better since our domestic nuclear projects are set to peak in 2010 for now. This will help us keep going,'' a Hitachi spokesman said.

Hitachi is expected to provide key equipment, while GE is likely to be in charge of fuel procurement and negotiations with the U.S.

government, making the alliance complementary, the spokesman said.

Key nuclear plant equipment includes reactors and turbines.

Shares in Hitachi ended trade flat at 744 yen, in line with Tokyo's electrical machinery index. Hitachi Plant gained 6.9 percent to 669 yen while Okano Valve rose 7.6 percent to 598 yen.

REUTERS CS DB1818

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