Centrica strikes nuclear deal with US firm

(Sharecast News) - Centrica has struck a major deal with America's X-energy to build modular nuclear reactors in the UK, the British firm confirmed on Monday. The British Gas owner, Britain's largest energy supplier, said it had signed a joint development agreement to deploy X-energy's Xe-100 advanced modular reactors (AMRs) in the UK.

Twelve 80-megawatt reactors will initially be installed at a site in Hartlepool. Once complete, the site will be capable of powering 1.5m homes, Centrica said.

It is the latest move by Centrica into nuclear. Earlier this year it agreed to invest £1.3bn for a 15% stake in the large-scale Sizewell C project in Suffolk.

Chris O'Shea, chief executive, said: "Centrica is proud to be at the forefront of Britain's clean energy transition.

"Our partnership with X-energy markets a bold step forward in delivering advanced nuclear technology that is not only scalable and secure, but vital to clean industry and powering homes."

Clay Sell, chief executive of the privately-owned X-energy, said: "We aim to build that fleet that has the ability to reliably deliver clean power, strengthen energy security and grow the trans-Atlantic economy for decades to come."

The AMRs - which are smaller and more flexible than traditional nuclear reactors - have already been designed. A commercial manufacturing plant is now under development on the Texas Gulf Coast. The plant is being developed jointly by X-energy and Dow Inc.

Under the terms of its deal with X-energy, Centrica will provide initial project capital with the goal of initiating full-scale activities in 2016.

Financial details were not disclosed. However, O'Shea told the Financial Times that the Hartlepool site would cost roughly £10bn and require government backing, in the form of a construction levy on electricity bills.

The site is already home to a nuclear power station, but it is being decommissioned. It is due to stop producing electricity from 2028.

Russ Mould, investment direct at AJ Bell, said: "During the energy crisis which followed Russia's invasion of Ukraine, Centrica saw big increases in profit and cash flow from higher prices.

"But questions could be asked of its long-term strategy and how it might continue to prosper when market conditions are not so helpful.

"In this context, news of its involvement in a US-UK venture, to create a golden age of nuclear in this country, are positive.

"However, it is telling that the first US small modular reactor (SMR) project, the Carbon Free Power Project, was cancelled less than two years ago due to rising costs. This is a new area and the path towards operational SMRs may not be smooth."

As at 1000 BST, shares in Centrica were up 3% at 164.95p.