The owner of British Gas is exploring a potential investment in Hinkley Point C as French state energy giant EDF scrambles to raise more funds for the troubled nuclear project.
Centrica has held discussions about a possible deal in recent months, although the talks are thought to be at an early stage, The Telegraph understands.
City sources suggested the company could put at least ￡1bn into the scheme, which is being built in Somerset, in exchange for a stake of 5pc or more.
Any deal would also likely secure Centrica a share of the plant’s electricity output, at a time when energy suppliers are revisiting nuclear as a potential source of “clean” power to replace fossil fuels.
It comes as EDF, which currently owns 68pc of Hinkley, faces a reported ￡5bn shortfall in funding needed to complete the scheme.
As part of efforts to plug the gap, the company and the French government have lobbied for financial support from the UK Government while also quietly seeking new private backers.
An investment by Centrica would extend a long-running partnership between the British company and EDF.
The FTSE 100 giant already holds a 20pc share in all five of EDF’s remaining UK nuclear power stations.
This also entitles it to trade an equivalent share of the electricity they generate, a deal that has helped Centrica net at least ￡1.5bn in profits since the 2022 surge in power prices.
With all but one of the plants scheduled to close this decade, however, the company’s bosses have been exploring whether to invest in new nuclear projects.
Until now, Centrica’s only interest was thought to be in the proposed Sizewell C plant in Suffolk.
The fundraising for that scheme is being overseen by the Government, which owns a controlling stake but wants to bring in private investment from pension managers and sovereign wealth funds.
Those in talks with the Government include Centrica, Emirates Nuclear Energy Corporation (Enec), Schroders Greencoat and Amber Infrastructure Group.
However, one City source said there was crossover between the Sizewell bidders and those having talks with EDF about a possible investment in Hinkley, with Centrica having expressed interest in the latter as well.
Centrica is expected to back only one of the nuclear schemes, or neither, people familiar with the discussions suggested. It is seen as unlikely to invest in both.
Hinkley may ultimately look more attractive to energy supplier Centrica, depending on the terms, as the plant is due to come online before Sizewell, the City source said. This is despite significant delays and cost overruns.
They added: “It would be a bit weird, strategically, for Centrica executives to say we want to lock a billion pounds of shareholders’ money up for 15 years before a single electron gets produced.
“The more strategic transaction would be to put a billion into Hinkley, but with a very good deal from EDF.”
On Friday, a spokesman for Centrica declined to comment. EDF also declined to comment.
In July, Chris O’Shea, the company’s chief executive, stressed the company’s continued interest in new nuclear schemes when asked about Sizewell C.
He said: “We’re in nuclear, we like nuclear, we like EDF as a partner, but the risk and return has to be in the right place.”
EDF is reportedly grappling with a ￡5bn funding shortfall at Hinkley after China General Nuclear, its co-investor, refused to put in any more cash.
That followed the Government’s decision to block Chinese involvement in Sizewell C and other future nuclear projects amid national security concerns.
Centrica’s renewed interest in Hinkley, the only new nuclear power plant currently under construction in Britain, comes after the company declined an option to invest 11 years ago.
Since then, however, Centrica has reversed plans to sell off its UK nuclear stake and has backed the technology as a clean source of energy.
However, investing in Hinkley Point C would still be a potentially risky bet for Centrica.
The project has burst its planned timescales and budgets, with the final cost now threatening to balloon to as much as ￡48bn – compared to EDF’s original estimate of ￡18bn.
At the same time, the year the plant is expected to come online has steadily drifted from an original target of 2025 to 2030 at the earliest. Construction began in 2018.
Most of the costs have fallen on EDF because the French company and CGN are the only shareholders, with no support provided by UK taxpayers up front.
Instead, EDF will only benefit from a government-guaranteed electricity price, set at ￡92.50 and indexed to inflation, when the power station switches on.
A different approach is being taken at Sizewell C, known as the regulated asset base model, which will allow investors to recoup money while the project is being built.
However, the trouble at Hinkley has shaken confidence among potential investors, with several large UK pension funds having ruled out any involvement in Sizewell C.
The Government’s hope of reaching a final investment decision in Sizewell before the end of this year looks increasingly doubtful amid delays to the fundraising process and a lack of enthusiasm from the private sector.
One person familiar with the discussions said prospective investors were told three weeks ago to expect a letter detailing the next phase of the process imminently but had still received nothing.
On Friday, a spokesman for the Department of Energy Security and Net Zero said: “There are no plans for a delay to Sizewell C, with discussions with potential investors ongoing, and our intention to deliver the project as quickly as possible.”
Separately, it has emerged that the Czech Republic’s government is poised to take a stake in Rolls-Royce’s mini-nuclear reactor business after placing the world’s first order for the technology last month.
The minority investment is being made via CEZ Group, the Czech state-owned energy company, according to local media reports. It has not yet been disclosed how big the stake is.