Centrica (LSE:CAN) has reached Heads of Terms with the UK Government for a 20-year regulated Contract for Difference (CfD) that will support the continued operation of the Sizewell B nuclear power station beyond its current planned closure date. The agreement extends the plant’s lifespan from 2035 to 2055 and provides a CPI-linked strike price of £70.50 per megawatt hour, giving the project long-term revenue certainty while eliminating exposure to wholesale electricity price fluctuations.
The agreement supports an investment programme of approximately £800 million to extend the life of the 1.2GW nuclear facility. Centrica said the funding will be provided through existing nuclear cash flows, avoiding the need to raise new equity. Sizewell B currently generates around 3% of the UK’s electricity and supplies enough zero-carbon power for approximately 2.5 million homes. The new regulated framework provides greater visibility over future earnings while strengthening Centrica’s portfolio of long-term energy infrastructure assets.
The extension also complements Centrica’s broader nuclear strategy, which includes its investment in the planned Sizewell C power station and its involvement in advanced modular reactor projects. The company believes the agreement will support UK energy security, protect highly skilled jobs and deliver long-term value for both customers and shareholders through stable, inflation-linked returns.
Centrica’s financial outlook remains supported by strong revenue growth and consistently positive free cash flow. However, these strengths are partly offset by volatility in bottom-line earnings, including a net loss reported in 2025, and a balance sheet that remains moderately leveraged. Technical indicators are broadly supportive, with the shares trading above key longer-term moving averages, while valuation appears reasonable based on a moderate price-to-earnings ratio and dividend yield.
More about Centrica
Centrica plc is a London-listed energy company with a 20% ownership interest in the UK’s operational nuclear power fleet, including the 1.2GW Sizewell B station in Suffolk. Alongside its existing nuclear assets, the company is investing in future low-carbon generation through its stake in the proposed 3.2GW Sizewell C project and its involvement in advanced modular reactor technologies.
Centrica’s nuclear investments operate under regulated frameworks, including Contracts for Difference and the Regulated Asset Base model, providing predictable, inflation-linked revenues. The company’s strategy is focused on supporting the UK’s transition to secure, low-carbon baseload electricity while generating stable long-term returns for shareholders.
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