Cracks appear as Centrica sells stake in nuclear power plants. It was hardly the most compelling sales pitch. “This is a very ageing fleet with some quite complicated technology,” was how Iain Conn, Centrica’s chief executive, described Britain’s nuclear reactors last week. For the past decade, the British Gas owner has held a 20 per cent interest in the eight plants, mostly built in the 1960s and 1970s and controlled by EDF, the giant French utilities group. Centrica hoisted the “for sale” sign in February last year, declaring itself no longer a “natural owner” for the stake. Yet a sale was never going to be easy. As Mr Conn acknowledged from the outset, it would be subject to huge political scrutiny, given sensitivities over nuclear security. Still, he said at the time, there were plenty of funds interested in “reliable assets like this” and in any case the sale wasn’t essential to Centrica since its balance sheet was “strong”. A year and a half on, the situation looks rather more serious. Two of the eight plants — Hunterston B in Ayrshire and Dungeness B in Kent — have been out of action. At the same time, Centrica’s balance sheet is looking weaker. The energy price cap, fierce competition and the loss of income from the two nuclear plants have hit its profits and have put its cashflow “under pressure”, leading most analysts to believe that a dividend cut is on the cards. Centrica could use the cash from a sale of its nuclear stake — which, on some estimates, could be worth £1 billion — more than ever. Dungeness B initially was shut down late last summer for regular inspections, but these identified the need for repairs on steam pipes. EDF said then that it had opted voluntarily to carry out “additional inspections and repairs”, which would “put the plant in a state to deliver best-ever performance later this year”. The restart of the twin reactors is scheduled for September and October. At Hunterston B, problems are rather more fundamental — cracks in the graphite core. All bar one of the nuclear fleet have graphite cores: huge, cylindrical structures ten metres tall, made up of thousands of graphite bricks. These contain channels through which uranium fuel is inserted into the reactor and also, crucially, through which control rods are inserted if the plant needs to be shut down. The investors that took John Laing Infrastructure Fund private are among the lead bidders for Centrica’s nuclear stake. Dalmore Capital and Equitix, which bought JLIF for £1.4 billion last year, have teamed up again to bid for the energy group’s interest in Britain’s nuclear plants, The Times understands. The consortium is believed to be one of two lead bidders, alongside Greencoat Capital, which was named as a suitor this year. A potential deal also may encompass a further stake of up to 29 per cent in the plants from EDF, which would reduce the French energy group’s share to 51 per cent. The total 49 per cent stake on offer could be worth as much as £4 billion. Early interest from Chinese nuclear groups is said to have fallen away amid political hostility to their involvement, leaving only a few infrastructure investment funds in the running.
Times 21st May 2019 read more »