Centrica abandons nuclear power plant plan

City Editor

Tuesday 5 February 2013

SCOTTISH Gas owner Centrica has abandoned plans to build new nuclear power stations in the UK with Electricite de France, raising serious doubts over the programme.

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TIM SHARP CITY EDITOR

Centrica follows Perth-based SSE and Germany's RWE and E.ON in withdrawing from new-build nuclear, although ScottishPower owner Iberdrola is evaluating plans for a power plant in Cumbria.

Centrica retains its 20% stake in Britain's eight existing nuclear power stations, including Hunterston B in Ayrshire, while EDF has the remaining 80%.

However, the British firm has opted to embark on a £500 million share buy-back instead of taking up the option of a 20% stake in four proposed new power stations, warning that costs have risen and the building timescale has grown.Sam Laidlaw, chief executive of Centrica, said: "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."Iberdrola is now one of the few companies officially left with an interest in building new nuclear power stations.As part of the NuGen consortium with France's GDF Suez it is weighing up plans for 3.6-gigawatt nuclear power station at Moorside, near Sellafield in West Cumbria. They had been in a partnership with SSE, formerly Scottish & Southern Energy, but the Perth-based utility pulled out in September 2011.A spokesman for Iberdrola told The Herald: "The project is going ahead as before. There is no change in the situation because of what Centrica may have decided to do."But he called for the Government to speedily confirm its plans for the electricity market. Key details such as guaranteed price levels for power have still to be confirmed."We would like clarity on the financial parameters of the project sooner rather than later," the spokesman said. "The longer it takes to clarify these details, the more difficult it becomes. We are all subject to inflationary pressures."Under current plans Iberdrola will not have to make a decision on proceeding until at least 2015.Centrica had the option of taking a 20% stake in four new reactors – two at Hinkley Point in Somerset and two at Sizewell in Suffolk.The cash return comes five years after Centrica conducted a £2.2 billion rights issue to finance the acquisition of a stake in the nuclear project with EDF.Centrica is estimated to have spent around £200m on development expenses which will be written off.The Scottish Government has said there will be no new nuclear power stations built in Scotland.Mike Weir, the Scottish National Party MP for Angus, said: "Centrica's withdrawal is further evidence that nuclear power is not the way forward."New nuclear has no place in future energy policy. The Westminster system should concentrate on investment in new renewable technologies for a cleaner, greener energy future."EDF Energy, the French company's UK arm, said it respected Centrica's decision and that momentum behind its first UK nuclear new-build project remained strong.It is thought that Chinese company CGNPC could enter a partnership with EDF.Angela Knight, chief executive of Energy UK, said Centrica's withdrawal "is a commercial decision made by one company".She added: "Other companies are still committed to building new nuclear and the Government framework is in place to make this happen."The utility's shares fell 19p to 1104p.Angelos Anastasiou, analyst at Seymour Pierce, said: "This announcement removes some uncertainty around Centrica's investment intentions."

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Centrica abandons nuclear power plant plan

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