Centrica to take 15% stake in £38bn Sizewell project

(Sharecast News) - British Gas-owner Centrica has taken a 15% stake in nuclear power station Sizewell C, it was announced on Tuesday, one of a number of new private investors to inject funds into the £38bn project. Following what is understood to be months of negotiations, Centrica confirmed it would take the stake with committed construction funding of £1.3bn.

It will be the third-largest shareholder after the government, which remains the biggest investor with a 44.9% holding. Canadian pension fund La Caisse will be the biggest private investor, after agreeing to take a 20% stake.

French state power firm EDF holds 12.5%, while specialist fund Amber Infrastructure Group has struck a deal to own 7.6%, with an option to acquire a further 2.4% from the government.

It had been widely reported that Canadian investment manager Brookfield would take a significant position, but the government instead opted to sell a larger stake to combination of different investors.

The expansion of Sizewell C, on the Suffolk coast, was initially proposed by EDF and China General Nuclear Power Group (CGN).

However, the government stepped in to remove CGN in 2022, on concerns about Chinese influence in key UK infrastructure, kickstarting the search for new private equity investors.

The project has also been heavily criticised by environmental groups, which are concerned about the impact on the local area.

However, the government pledged £11.5bn of new state funding for Sizewell earlier this month, as part of its wider plans to boost economic growth and improve the country's energy supply.

In total, the project is expected to cost around £38bn, significantly higher than the £20bn estimated by EDF and the government in 2020.

Chris O'Shea, Centrica chief executive, said: "The UK needs more reliable, affordable zero carbon electricity, and Sizewell C will be critical to supporting the country's energy system for many decades to come.

"That's why I'm delighted to be announcing this milestone investment, which will see Centrica commit £1.3bn for a 15% equity stake, and deepens our long-standing involvement in the UK nuclear industry."

The investment is part of the blue chip's £4bn green-focused investment programme. It currently expects a gross investment of around £500m cumulatively to the end of 2028, and over £1bn on the same basis by the end of 2033.

Sizewell is forecast to contributed around £50m of EBITDA per annum to Centrica by the end of 2028, £150m immediately pre-operations and "significant" acceleration once the plant enters the operational phase.

Sizewell is being built under a regulated asset base (RAB) model, which allows investors to get paid during construction rather than have to wait until the project is finished. A commercial operations date has been pencilled in for the mid-to-late 2030s.

Chancellor Rachel Reeves said: "La Caisse, Centrica's and Amber's multi-billion pound investment is a powerful endorsement of the UK as the best place to do business and as a global hub for nuclear energy.

"This investment will create thousands of good quality jobs and boost the local economy."