Acquisition boosts Centrica’s power generation capacity
Centrica, the parent company of British Gas, has completed the purchase of the Severn gas-fired power station in Newport, south Wales, for £370m. The acquisition strengthens the company’s position in the UK’s energy market amid ongoing volatility in global gas pricing.
The combined-cycle gas turbine facility, commissioned in 2010, ranks among the UK’s most efficient power stations of its kind. It is one of a small number of strategic CCGT assets capable of delivering flexible generation at scale — a capability Centrica says is increasingly vital as the energy transition advances.
The deal brings Centrica’s power generation portfolio to four gigawatts. Management expects the asset to contribute annual earnings of between £30m and £60m from 2027 onwards.
The Severn site sits close to growing sources of power demand in south Wales, including data centre developments in the region. The company outlined its capital investment programme, expected to total around £1.1bn during 2026.
Speaking at Centrica’s annual general meeting in Cardiff, chief executive Chris O’Shea highlighted the asset’s role in maintaining system stability. “The importance of reliable, flexible generation to balance the system continues to increase, keeping energy supplies secure and affordable as the energy transition progresses,” he said. “Severn will play an important role in supporting that journey.”
O’Shea noted that new capacity delivery faces headwinds from grid access constraints, rising costs and supply chain pressures. The expected closure of older gas assets towards the end of the decade will further increase reliance on efficient flexible assets such as Severn, he added.
At the Cardiff AGM, Centrica also told investors it anticipates retail division earnings at the lower end of its £500m to £800m guidance range. Warmer weather in recent months has reduced household heating demand, while the company continues to work through elevated bad debt levels among residential customers.
The company said it is monitoring oil and gas market developments stemming from conflict in the Middle East, which has pushed European natural gas prices roughly 20% above year-ago levels, with UK natural gas prices approximately 25% higher.
The Severn station was acquired from Calon Energy Group.