British Gas-owner Centrica buys Welsh power station for GBP370 million

(Alliance News) - Centrica PLC on Thursday reported "good progress" on its strategy and said it has completed the purchased of a power station in North Wales.

Centrica said profit at its Retail arm is being pressured by "challenges in residential energy bad debt collection", though at Infrastructure, it is seeing a boost from strong realised prices.

Centrica shares were down 4.6% on the mixed news, trading at 199.90 pence each in London on Thursday morning. The wider FTSE 100 index was down 0.4%.

The Windsor, England-based owner of British Gas has acquired the Severn combined-cycle gas turbine from Calon Energy Group for GBP370 million. The deal has been funded "entirely from existing cash resources", Centrica said.

"We are delighted to add the Severn power station and its talented team to Centrica, which brings our total UK and Ireland electricity generation capacity in planning, construction and operation to 4GW. The importance of reliable, flexible generation to balance the system continues to increase, keeping energy supplies secure and affordable as the energy transition progresses," Chief Executive Chris O'Shea said.

"Severn will play an important role in supporting that journey. With the delivery of replacement capacity being impacted by grid access, rising costs and supply chain constraints, alongside the closure of ageing gas assets towards the end of the decade, the need for assets like Severn will increase."

The Severn asset is expected to deliver annual earnings before interest, tax, depreciation and amortisation between GBP30 million and GBP60 million from 2027 and earnings per share accretion from the first full-year after the deal is sealed, though a small net loss from the asset is expected for 2026, "due to transaction and integration costs, alongside naturally lower revenues in the summer months".

Centrica added: "Severn's scale and flexibility allows it to capture a diverse range of revenue streams, including the capacity market, provision of critical system services to the National Energy System Operator and the sale of power to the wholesale market. Severn is strategically positioned near growing sources of power demand, including data centre developments in South Wales."

Ahead of its annual general meeting on Thursday, Centrica also said it "continues to make good progress on the execution of its strategy".

It expects capital investment of GBP1.1 billion for 2026.

The Retail unit adjusted Ebitda is expected to be at the lower end of its GBP500 million to GBP800 million outlook range, which Centrica puts down to warmer weather so far this year and "continued challenges in residential energy bad debt collection".

But Infrastructure adjusted Ebitda is to be at the upper end of a GBP500 million to GBP650 million outlook range on higher realised prices.

"The outlook is subject to the usual uncertainties for the balance of the year, including weather, commodity prices, regulation and government policy. We also continue to monitor the impact of the ongoing conflict in the Middle East," Centrica added.

Retail adjusted Ebitda amounted to GBP557 million in 2025, while in Infrastructure it was GBP669 million.

By Eric Cunha, Alliance News news editor

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