The British government stands to make more than £400m in the hotly contested auction of land to build new nuclear power stations as prices have soared. The bidding has become so intense that it has forced out one of the three main bidders.

The consortium of Spain’s Iberdrola, the French utility GDF Suez, and Britain’s Scottish and Southern Energy has dropped out of the race, leaving EDF of France and the German partnership of RWE and Eon to continue in a bid process launched almost two months ago.

People close to the bidding said that the Iberdrola/GDF/SSE consortium had decided to quit after the price of one of the three sites on offer – Bradwell in Essex – jumped from an original reserve price of £40m to a bid of £160m yesterday.

Financial Times