Centrica hoping to strike Sizewell C investment deal, ‘if the returns are right’

The boss of British Gas owner Centrica has said he is hopeful of striking a deal to invest in the new nuclear power plant Sizewell C, but stressed any commitment would have to “give us the returns we need”.

Chris O’Shea, chief executive of Centrica, said the group was in discussions over pumping cash into the new nuclear plant in Suffolk, with aims to secure a deal in the first half of the year.

He said: “I like nuclear. I’m really hopeful we can make progress with Sizewell C this year.”

But he said it “all depends on the overall cost of the project and returns”.

“I’m not going to commit Centrica money for something that won’t give us the returns we need,” he said.

EDF, the French energy giant that owns and runs Britain’s nuclear fleet, and the Government were the first backers of the project.

But they have been trying to raise billions more from prospective investors, including Centrica.

Labour threw its weight behind nuclear power recently, saying it will reform planning rules to make it easier to build new nuclear reactors.

Mr O’Shea declined to give details on the size of stake Centrica was looking to take in the group, except to say it would be “between 1% or 2% and 50%”.

The comments came as Centrica revealed earnings in its British Gas supply arm for households and businesses more than halved last year, to £297 million down from £751 million in 2023, as profits continued to pull back following record highs seen during the energy crisis.

Centrica said the majority of the fall was due to the absence of energy crisis allowance payments.

Regulator Ofgem allowed energy suppliers to recover costs that they had racked up during the crisis, but this came to an end last year.

Centrica also revealed British Gas shed 70,000 household customers in the year, with its total residential customer base falling to 7.46 million in 2024 from 7.53 million in 2023.

British Gas was last month revealed to have been overtaken by rival Octopus Energy as the UK’s largest household energy supplier, in a report by energy consultancy Cornwall Insight.

The wider Centrica business reported a 40% drop in underlying operating profits to £1.55 billion for 2024, down sharply on the £2.75 billion the previous year.

On a statutory basis, Centrica’s operating profits fell to £1.70 billion from £6.51 billion in 2023.

The results come as Cornwall Insight this week forecast more bills pain for households, predicting an £85 rise in the Ofgem price cap to £1,823 in April.

Mr O’Shea said the group was also in “constructive conversation” with the Government to pave the way for Centrica to invest £2 billion in its Rough gas storage site to boost capacity.

Rough – a facility under the North Sea off the east coast of England – is the country’s largest gas storage site.

Centrica is looking for fresh help from the Government to fund a multi-billion-pound investment to increase the site’s capacity, which it said would help bring energy costs down.

Mr O’Shea claimed that if Rough had been operating at full capacity over the two years at the height of the energy crisis, “it would have saved UK consumers more than £5 billion – that’s £200 for every house in the UK”.

He admitted that investment in Rough was unlikely to have avoided the increases in energy prices that households are seeing this year, though he said it would “contribute to lower prices”.

The results showed its capital spending ramped up to £564 million in 2024 from £415 million in 2023, with the group halfway through a £4 billion investment plan.

It announced further returns for its army of small shareholders, with a 13% full-year dividend increase and an extra £500 million in share buybacks, taking the total program to £2 billion, which will be completed around the end of 2025.

Shares in the group surged 8% on Thursday as results were also better than expected.