Plans to build a new nuclear reactor at Hinkley Point, near Burrnham-On-Sea, suffered a blow today (Monday) when utility company Centrica pulled out of the project.
Centrica says its decision not to proceed follows a “detailed appraisal of the project”.
It expained: “While there has been progress in a number of key project areas, particularly design and planning, there remains uncertainty about overall project costs and the construction schedule.”
Centrica acquired a 20% interest in EDF Energy’s eight operational nuclear power stations in the UK in 2009 when it also took an option for a 20% interest in the construction of new nuclear power stations at Hinkley Point and Sizewell.
Having taken the decision not to proceed with the new nuclear investment, the Group will launch a £500 million share repurchase programme, to return surplus capital to shareholders, which will be conducted over the next 12 months.
Sam Laidlaw, Chief Executive of Centrica, said: “We believe that nuclear generation has a valuable role to play in a balanced UK energy mix. 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. 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.”
Centrica’s 20% interest in the eight existing nuclear power stations in the UK is unaffected by the decision.
