Centrica exits nuclear new build race

London - Centrica has decided not to proceed with its plans to invest in the UK’s new build programme for the nuclear industry.

In 2009, Centrica acquired a 20% interest in EDF Energy’s eight operational nuclear power stations in the UK and also took an option for a 20% interest in the construction of new nuclear power stations at Hinkley Point and Sizewell.

The decision not to proceed followed a reappraisal of the project, Centrica, noting that pre-development expenditure on the project had been approaching an agreed £1 billion cap.

While there has been progress in a number of key project areas, particularly design and planning, Centrica was concerned about uncertainty about overall project costs and the construction schedule.

Nuclear generation has a valuable role to play in a balanced UK energy mix, said Centrica chief executive Sam Laidlaw. However, he added, since the 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,” said Laidlaw.

Having taken the decision not to proceed with the new nuclear investment, Centrica said it would launch a £500 million share repurchase programme, to return surplus capital to shareholders, which will be conducted over the next 12 months.

Centrica’s 20% share of the pre-development expenditure will be written off as an exceptional cost in the Group’s 2012 results. The group’s 20% interest in the eight existing nuclear power stations in the UK is unaffected by this decision.