Centrica plans to invest in nuclear power

25 February 2008

Centrica, the owner of British Gas, plans to invest in new energy sources, including nuclear power, in order to diversify power generation away from natural gas-fired plants.

Sam Laidlaw, the company's chief executive, was quoted by the Daily Express newspaper as saying, "Nuclear is going to be a very important part of the energy supply mix in the future. Obviously, we are going to be a major user of nuclear energy, but we would like to be a major investor as well."

He said that "heavy investment" would be needed in renewable energy, largely offshore wind farms, and the group would also be looking at more gas-fired plants and partnerships to build new nuclear rectors. Laidlaw added that the company's investment in nuclear would be greater than the £3 billion ($6 billion) that it is planning to invest in offshore wind farms.

In a presentation on 21 February following the release of Centrica's financial results for 2007, Laidlaw said: "If we want a proxy hedge for gas it has to be non-gas power and that … leaves us with coal, included in that clean coal, wind or nuclear. And we look at all of them. Clearly the low carbon footprint that we have from our existing suite of assets, and a view that we have about increasing carbon prices over time. Unless we can find clean coal economically or unless we can see coal assets that have the opportunity for reducing their emissions over time, makes that structurally a bit more of a challenge."

He added, "New nuclear is going to take time, wind is clearly something that is already under construction and we will do more of. But at the end of the day, it is a balance of value and the determinants of value are obviously construction cost, carbon price and reliability. And we look at all those dimensions. But we are not ruling any of them emphatically out."

Centrica reported a 40% increase in operating profits to £1.95 billion ($3.84 billion) in 2007, compared with £1.39 billion ($2.74 billion) in 2006. Revenue totalled £16.3 billion ($32.1 billion) in 2007, down 0.4% from £16.4 billion ($32.3 billion) in 2006.

Filed under: This article is not categorised