Centrica buys 850MW Severn gas plant for £370m
Get the Energy newsletter
Daily energy & climate — solar, EVs, oil, the policy fights and tech bets shaping the transition. Free.
- Centrica is paying £370m to buy the 850MW Severn combined-cycle gas turbine plant near Newport, south Wales — a facility built in 2010 — expecting £30m-£60m in annual earnings from next year, an implied earnings yield above 10%.
- The plant is projected to earn an additional £35m a year in capacity market payments through 2030, the payments utilities receive simply for remaining available to generate when called upon.
- The deal lands as Britain's national energy system operator forecasts a record-breaking summer for wind and solar generation, with possible periods when renewable supply outstrips grid demand.
- Chris O'Shea, Centrica's chief executive, said grid access delays, rising costs, supply chain constraints, and the closure of ageing gas assets toward the end of the decade will increase demand for plants like Severn.
- The government's clean power plan targets gas plants producing just 5% of Britain's electricity by 2030, down from 31.5% in 2025, but O'Shea argues gas backup for intermittent renewables will remain indispensable.
- The acquisition continues Centrica's pivot toward infrastructure-style contracted revenues, following last year's £1.3bn stake in the Sizewell C nuclear project and the purchase of the Isle of Grain gas import terminal.
- Centrica separately warned that operating profits from its retail businesses, mainly British Gas, will land at the lower end of guidance this year, sending shares down 5%.
Why it matters: Centrica's £370m gas-plant purchase looks counter-intuitive during a renewable boom, but the economics are concrete: an implied earnings yield above 10% plus £35m in annual capacity payments through 2030. The deal extends Centrica's shift away from volatile retail energy toward steadier infrastructure-style contracted revenues, and shares already fell 5% on weaker British Gas guidance.
Ask SkimNews
