Member Article

Centrica withdraw from UK nuclear project

Berkshire energy firm Centrica have pulled out the UK’s nuclear re-building project, citing uncertainty over costs and construction schedule.

The British Gas owner secured an option to take a 20% interest in the construction of new nuclear power stations at Hinkley Point and Sizewell in 2009, but has opted to return £500m to shareholders instead of progressing with the project.

It had been Centrica’s intention to invest in two reactors at Hinkley Point, in Somerset, and another two at Sizewell, in Suffolk.

Sam Laidlaw, Chief Executive of Centrica, said: “We believe that nuclear generation has a valuable role to play in a balanced UK energy mix. Centrica and EDF continue to enjoy a successful partnership in existing nuclear. However, since our initial investment, the anticipated project costs in new nuclear have increased and the construction timetable has extended by a number of years.

“These factors, in particular the lengthening time frame for a return on the capital invested in a project of this scale, have led us to conclude that participation is not right for Centrica and our shareholders. In 2012 we invested over £2 billion in securing supplies of energy for the UK and where we see attractive returns we will continue to invest in Britain’s energy future.”

EDF reacted to the news with a statement that said it valued the expertise Centrica had brought to the new nuclear project, and understood the investment may not meet Centrica shareholders’ current expectation.

CEO Vincent de Rivaz said: “A robust ‘Contract for Difference’ will be the basis to finalise discussions with potential investors. Centrica’s decision underlines the challenge this represents for the Government.

“Our discussions with the Government on the CFD are based on well understood and stable costs and a timetable which has already taken account of all the events since 2009 when Centrica joined the project.”

Centrica retains a 20% interest in eight existing EDF nuclear power stations in the UK.

This was posted in Bdaily's Members' News section by Tom Keighley .