British Gas owner Centrica entered the nuclear power sector today with a £2.3 billion deal for a 20 per cent stake in generation firm British Energy.
Centrica is buying the interest from France’s EDF, which completed a £12.5 billion takeover of British Energy in January.
The two parties agreed the side deal in principle last summer, but talks have dragged on because energy prices have plunged since then. Today’s agreement is less than the 25 per cent stake envisaged last year.
British Energy plants supply the UK with around one-sixth of its electricity needs in total. It has sites at Heysham in Lancashire, Hartlepool, Dungeness in Kent, Hinkley Point in Somerset, Hunterston in Ayrshire, Sizewell in Suffolk and Torness in East Lothian.
Today’s deal, which is subject to regulatory approval, could be completed by the end of September. Centrica is offsetting some of the cost of the deal by selling its 51 per cent stake in Belgium power generator SPE to EDF for £1.2 billion.
Centrica said the British Energy agreement made it a key player in the development of new nuclear power in the UK.
As well as 20 per cent of British Energy’s profits, it will gain 20 per cent of uncontracted output and for a joint venture with EDF under which they will undertake pre-development activities for a planned nuclear build programme.
The two companies expect the 80-20 joint venture to construct, operate and decommission four new longer-lasting EPR reactors, which are a type of pressurised water reactor, similar to those already in operation in nuclear industry-reliant France.
Centrica currently owns enough power plants to meet about 35 per cent of demand from its 16 million UK customers, but with the British Energy stake this could rise to more than 45 per cent.
PA