en.Wedoany.com Reported - Centrica has announced the acquisition of the Severn Combined Cycle Gas Turbine (CCGT) power station in South Wales from Calon Energy Group for approximately £370 million. This acquisition brings Centrica's total power generation capacity in the UK and Ireland to 4 gigawatts, including 1 gigawatt of assets under planning and construction, sufficient to supply up to 6 million households.
The Severn power station, which entered commercial operation in the fourth quarter of 2010, has an operating capacity of 850 megawatts (comprising two 425 MW units) and is one of the most efficient CCGT plants in the UK. It is one of the few strategic assets in the country capable of providing flexible power generation at scale. Its size and flexibility enable it to capture diverse revenue streams, including capacity market payments, providing critical system services to the National Energy System Operator, and selling electricity to the wholesale market. The Severn power station is located near growing electricity demand sources, such as data center development projects in South Wales, supporting its long-term utilization and revenue visibility. The Severn power station is expected to receive an average of £35 million per year in capacity market payments through 2030, with annual EBITDA of £30 million to £60 million from 2027 onwards, adding to earnings per share from the first full year following completion of the acquisition.
Chris O'Shea, Group Chief Executive of Centrica, stated that the importance of reliable, flexible generation for balancing the system continues to increase, and the Severn power station will play a significant role in supporting this process by ensuring the security and affordability of energy supply during the energy transition. He noted that gas-fired generation will continue to play a key role in maintaining system stability in the UK's energy transition, providing reliable, dispatchable power and ensuring supply security. The Severn power station is highly aligned with Centrica's current portfolio and strategy, leveraging Centrica Energy's role in managing the market route for existing power stations, offering incremental returns through optimization, and supported by favorable market dynamics.
Chris O'Shea further stated that incorporating the Severn power station and its team into Centrica brings its total power generation capacity under planning, construction, and operation in the UK and Ireland to 4 GW. He emphasized that demand for assets like Severn will increase due to constraints on the delivery of replacement capacity, including grid access, rising costs, and supply chain constraints, coupled with the closure of aging gas assets by the end of this decade. The Severn power station is a high-quality asset that enhances its ability to provide the reliable electricity that customers and the host country depend on.
The acquisition of the Severn power station aligns with Centrica's strict financial framework and capital allocation policy. Since the company's preliminary results announcement for 2025, an additional £400 million has been committed to investment plans, with capital investment for 2026 expected to be approximately £1.1 billion. Centrica will fully fund the acquisition of the Severn power station from existing cash resources, on a cash-free, debt-free basis. A small net loss is expected in 2026 due to transaction and integration costs, while revenue is naturally lower during the summer months.
