British Gas owner Centrica take a big step into nuclear power.

Centrica plc, Britain’s largest domestic energy supplier, has announced it is to invest a £2.3 billion for a 20% stake in nuclear firm British Energy.

British Energy, bought by French energy company EDF in January this year, currently operates eight nuclear power stations in the UK including plants at Hartlepool, Dungeness, Hinkley Point and Heysham, and between them, provide more than 14% of the UK’s domestic energy supply.

Plans are also in the development stages to build four European Pressurised Reactors (EPRs) in the UK, with the first operational by the end of 2017. These reactors will, in part, replace the existing power stations, which are due to be decommissioned between 2014 and 2035. 

Centrica’s stake in British Energy takes it a step forward to fulfilling one of its strategic priorities – “to reduce exposure to short-term movements in wholesale energy costs through increased integration.”

Roger Carr, Chairman of Centrica, said: “The deal represents good value for Centrica shareholders, improves the strategic balance of our business and further underpins our green energy credentials.”

Pierre Gadonneix, Chairman and Chief Executive of EDF, said: “This transaction, part of the group’s strategy of developing its positions in Europe, will enable leading British generator, Centrica, alongside EDF, to take part in the re-launch of nuclear energy in the United Kingdom through an industrial partnership in a form already pioneered by EDF in China and the US.”

As part of the deal, EDF have agreed to purchase Centrica’s 51% stake in SPE, a Belgian generation and supply business, for £1.2bn. Both transactions are dependent upon both shareholder and regulatory approval, with completion likely during the third quarter of 2009.

Centrica saw a 6% increase in its share price following the announcement.