Nuclear Power's Comeback: Centrica's Sizewell C Stake as a Pillar of UK Energy Security

The UK's energy landscape is undergoing a seismic shift, with nuclear power emerging as a cornerstone of the government's strategy to achieve energy independence and net-zero emissions by 2050. At the heart of this transformation is the Sizewell C nuclear project—a £40 billion endeavor that could supply 6 million homes with low-carbon electricity. Centrica, the owner of British Gas, has positioned itself strategically by securing a 15% stake in the project, leveraging its expertise in energy distribution to capitalize on a market increasingly favoring stable, baseload power. Here's why this move represents a compelling investment in UK energy security and low-carbon growth.

The Strategic Play: Aligning with UK Energy Policy

The UK government's commitment to Sizewell C is unambiguous. With an 84% stake acquired in 2022, the state has prioritized nuclear energy as a hedge against volatile renewable sources like wind and solar, which remain intermittent and geographically constrained. Centrica's 15% stake—matching EDF's reduced holding—positions it to profit from a project that is both politically insulated and financially backed by taxpayer funds. The government's recent £14.2 billion injection in June 2025 underscores its resolve, with plans to create 10,000 jobs and 1,500 apprenticeships by the project's mid-2030s operational start.

For Centrica, this is a defensive move. Its core business—retail energy—faces margin pressures as households and businesses seek cheaper, greener alternatives. A stake in Sizewell C diversifies its revenue streams while aligning with regulatory trends favoring nuclear energy. The project's 3.2GW capacity will provide predictable, low-carbon baseload power, which is critical for balancing grids reliant on renewables.

Risks: Cost Overruns and Delays

No project of this scale is without risks. Sizewell C's total cost has more than doubled since its inception, from £20 billion to £40 billion, driven by inflation, regulatory hurdles, and delays. The Office for Value for Money (OVfM) highlighted that EDF's prioritization of Hinkley Point C—another troubled nuclear project—stalled Sizewell's progress, with a development consent order submitted only in 2020, eight years after initial proposals.

Critics argue the project risks becoming an “HS2 mark 2”—a costly, overambitious infrastructure project with delayed returns. The final investment decision, originally set for July 2024, was pushed to July 2025, raising concerns about bureaucratic inertia. Meanwhile, Centrica's CEO, Chris O'Shea, has emphasized that stake negotiations hinge on cost certainty and returns—a reminder that Centrica's financial upside depends on project execution.

Why the Upside Outweighs the Risks

Despite these hurdles, Sizewell C's strategic importance to the UK government cannot be overstated. Energy Secretary Ed Miliband has framed it as a linchpin of the “golden age of clean energy abundance,” with nuclear power deemed essential to meet net-zero goals. The project's delays and costs are being addressed through a new RAB (regulated asset base) funding model, which shifts risks from the private sector to consumers via regulated returns—a structure proven viable in projects like Crossrail.

Moreover, the geopolitical calculus favors nuclear investment. As energy markets globalize, the UK's reliance on imported gas—a commodity subject to geopolitical volatility—has proven costly. Sizewell C reduces this exposure while bolstering energy independence. For Centrica, the project also offers cross-selling opportunities: its retail customers could benefit from stable, government-backed energy pricing, enhancing customer loyalty.

Investment Thesis: A Defensive, Long-Term Play

For investors, Centrica's Sizewell C stake is a high-potential, low-risk entry into the UK's energy transition. While the stock's near-term performance may be muted by macroeconomic headwinds (e.g., interest rate sensitivity in utility stocks), the long-term tailwinds are robust:

1. Regulatory Tailwinds: The UK's Climate Change Act mandates net-zero by 2050, ensuring sustained demand for low-carbon infrastructure.
2. Cost Pass-Through: The RAB model shields investors from construction overruns, as risks are transferred to consumers.
3. Diversification: Centrica's core utility business remains resilient, with regulated returns in energy distribution shielding it from price wars.

Conclusion: A Stake in the Future

Sizewell C is not just a power plant—it's a symbol of the UK's commitment to decarbonization and energy sovereignty. Centrica's 15% stake, while requiring patience, offers investors exposure to a project that is politically shielded, financially backed, and strategically vital. While risks like delays and cost overruns linger, the alignment with national energy goals and the defensive nature of baseload power make this a compelling, long-term investment. For portfolios seeking exposure to the energy transition, Centrica's strategic move into Sizewell C is a bet on stability in an otherwise volatile market—a rare opportunity in the pursuit of low-carbon growth.