The eventual takeover of British Energy, the U.K.’s biggest utility, could be a test case for the future of Europe’s nuclear industry.

British Energy owns eight of the ten nuclear power plants in the U.K. Those plants provide over one-sixth of the country’s electricity, as well as most of the locations that would be most suitable for the new generation of nuclear power plants that the government is promoting. But it remains to be seen how far down the nuclear trail the Brits will go when it comes time for the government to sell its 35.2 percent stake in British Energy – a stake that companies in Germany and France are eager to obtain.

London gave its formal backing to a nuclear revival earlier this year, calling it a “safe and affordable” way to secure energy supplies and to flight global warming. The completion of the first nuclear power plant is planned for 2017 and the U.K. is in a hurry, because its North Sea gas and oil supplies are dwindling and most of its nuclear plants expect decommissioning by 2020.

And to herald in a nuclear renaissance, President Nicolas Sarkozy of France signed a wide-ranging cooperation pact with Prime Minister Gordon Brown during an official visit to the U.K. in March.

London and Paris agreed to exchange expertise and cooperate on nuclear safety, waste management, and reactor licensing. They also said that the pact might be extended to other European countries. U.K. authorities hope the Franco-British partnership can spark a rebirth of the nuclear industry to fight global warming.

Europe’s nuclear industry is following the outcome closely. The fact that the U.K. and France are talking so openly about a nuclear renaissance is prompting internal debates throughout Europe, even if it will take years for countries to decide what to do about nuclear, until recently considered a political liability. The U.K.’s new generation of nuclear plants, for the first time completely financed by the private sector, will be a test case for Europe’s nuclear future, and could prompt a revival.

“Obviously if there is a successful Franco-British program of new nuclear power stations, it will be a significant experience, and all sort of European countries will look to that,” said Paul Ekins, a European energy and environment policy expert at King’s College in London. “It will be watched very closely by others, but they will nonetheless interpret that experience in the context of their own countries.”

No doubt the agreement also intended to give French companies (who have the region’s best expertise) the lead in the race for British Energy, which has a market capitalization of about $15 billion.

The German utility RWE has reportedly made the first move, offering $22 billion for the stake in British Energy. Analysts expect France’s state-controlled EdF to join the bidding. Reportedly, both companies have also been in talks with U.K.’s Centrica to launch a joint takeover bid, although it’s not clear whether that venture would be two- or three-way. Ultimately the British government will have a critical say in the future of British Energy. It has discussed selling its stake with at least five European heavyweights, including EdF, Spanish Iberdrola, RWE, and E.On, which have all expressed interest in building nuclear power plants in the U.K.

The government will likely favor a joint bid that includes a British company, especially since any full take-over would prompt antitrust concerns, given the weight the interested parties have in the country.

“The revival is here,” said Santiago San Antonio, director general of Brussels-based Foratom, the umbrella association for Europe’s nuclear industry. “Support was already there from Brussels. And now, European powers are teaming up to develop the nuclear industry. It’s a very important signal for investors, for the public, and especially for the industry.”

The timing of the U.K.’s nuclear revival is also critical, Ekins said. Delays and cost overruns have delayed the completion of the 1,600-megawatt Olkiluoto nuclear reactor in Finland. That project is Europe’s first new reactor in many years. The problems at Olkiluoto have undermined some of Europe’s enthusiasm.

But it also appears that the E.U. is beginning to recognize the fact that sources like wind and solar will not be sufficient to meet is power needs and that more nuclear plants will be needed. On April 15, the European Commission’s Energy Commissioner, Andris Piebalgs said, “In order to make the necessary investments possible, the Commission is examining ways to address the difficulties related to licensing, financing and different nuclear liability regimes.” If the Commission does streamline those regulations, then Europe may soon see a surge in nuclear.