Centrica boss has bold plans to back British energy projects – but will strategy

The sheer scale of the Sizewell B nuclear power plant, sprawling along the Suffolk coastline, is a marvel to behold. Its white dome is bigger than that of St Paul’s Cathedral and can apparently withstand a plane flying into it, which is just as well because it contains the UK’s only pressurised water reactor, where atoms of uranium are split to create nuclear energy.

John, our photographer, and I are not allowed in; however, once we have passed the stringent security checks and been kitted out in safety coat and shoes, hard hat, earmuffs and goggles, we are permitted to enter the turbine hall.

Sprinting ahead, up the seemingly infinite flights of stairs to the top of the building is Chris O’Shea, 52, chief executive of Centrica, the parent company of British Gas.

He is as exuberantly bearded as an Edwardian dandy, though he says his facial hair role model is Ron Burgundy, the fictional 1970s newsreader played by Will Ferrell in the film Anchorman. He is also a marathon runner, which accounts for the rapid ascent of the steps.

O’Shea is an evangelist for nuclear power – something that has not always been the case with his predecessors in the chief executive’s office.

‘Ten years ago people thought nuclear was a dying technology, but there has been a renaissance,’ he says. In the summer, he announced that Centrica was taking a 15 per cent stake in the new Sizewell C plant being built next to the existing Sizewell B facility. The cost of the whole project is estimated at £40 billion.

Visionary: Sizewell C, in which Centrica, led by Chris O’Shea has bought a 15 per cent stake will be built next to the Sizewell B nuclear reactor

‘Sizewell C will probably run for 100 years,’ O’Shea says. ‘The person who will take the last electron it produces has probably not been born. We are very happy to be the UK’s largest strategic investor.’

This is a significant change from the stance taken by some previous Centrica bosses, who backed away from new nuclear projects because of the risks involved and the uncertainty of the returns.

Speaking of the position before he took over, O’Shea says: ‘We tried to sell our share of the nuclear power stations that we own today, but personally I didn’t understand it. I thought it was a flawed strategy.

‘I just thought: sustainable carbon-free electricity in a country that needs electricity – and we import 20 per cent of ours – why would we look to sell nuclear?’ Backing nuclear power is part of O’Shea’s wider strategy to invest in UK energy infrastructure.

He believes this will result in more stable revenues for the company and lower prices for customers, which would certainly be welcome in an energy market that has been subject to wild swings.

‘Over the past few years we have seen a lot of volatility in energy prices,’ he says. ‘The investments we are making are trying to reduce that volatility in energy prices on bills and on Centrica’s earnings.’

Centrica’s 500,000 shareholders include an army of private investors, many of whom came on board during the ‘Tell Sid’ privatisations of the 1980s and all of whom will be hoping he is right. What about the risks that deterred his predecessors? O’Shea argues he will achieve reliable returns thanks to a Government-backed financial model that enables the company to recover capital ploughed into Sizewell C and make a set return.

Nuclear power in general and the Sizewell C project in particular remain controversial, however.

Local campaign groups are trying to block construction, which they say will affect plant, bird and animal life, as well as questioning the claimed economic benefits.

Opponents, who have included actor Bill Nighy and artist Maggi Hambling, argue consumers will be on the hook for delays and cost-overruns.

And critics say that while major nuclear accidents are rare, when they do happen they are catastrophic: think Chernobyl or Fukushima. Then there is the problem of radioactive waste, which must be safely stored for hundreds of years afterwards.

Sizewell is just one in a programme of investments in UK energy infrastructure including liquefied natural gas (LNG), hydrogen storage and gas from the Irish Sea.

O’Shea’s boldness is an exception to the general atmosphere of timidity over investing in the UK.

When he took over as chief executive at the start of the pandemic in 2020, the business was ‘not in good shape financially or operationally’ he says, adding: ‘So a radical overhaul was required. Now we are in a good position to invest.’

Scrutiny: The Centrica boss is interviewed by Financial Mail’s Ruth Sunderland

Major moves include a £200 million stake in the LNG terminal at Isle of Grain in Kent.

The belief is that LNG, which produces significantly fewer greenhouse gas emissions than other fossil fuels and is easier and cheaper…