The UK government has officially approved the construction of the £38 billion Sizewell C nuclear power plant in Suffolk, marking a major milestone for one of the country’s most ambitious energy infrastructure projects in recent memory.

The project, now fully backed by a mix of domestic and global investors, includes prominent names like Canada’s La Caisse pension fund. The British government will hold the largest stake at 44.9%, followed by La Caisse with 20%. Centrica PLC (LSE:CNA) will invest for a 15% share, while Amber Infrastructure and France’s EDF (EU:EDFBZ) will own 7.6% and 12.5%, respectively.

Centrica shares surged over 4% on the news, reflecting investor confidence in the long-term profitability of the project.

Sizewell C represents a renewed commitment to nuclear power in Europe, aligning with broader goals to upgrade ageing energy infrastructure, enhance energy security, and meet climate change targets. Once completed, the facility is expected to power around 6 million homes and create up to 10,000 jobs at the height of construction activity. It will be only the second new nuclear power station built in the UK in the last two decades.

Centrica’s investment in the project totals £1.3 billion, structured with a phased funding model. Roughly 40% of the capital will be deployed by the end of 2028, and the company anticipates generating £750 million in cash yield during the construction phase.

The financial outlook is strong: Centrica expects a real return on equity of 10.8% and an internal rate of return above 12%. The company believes the investment will be earnings accretive starting in 2026. By 2028, EBITDA contributions are projected at £50 million, increasing to £150 million once the plant is operational.

At completion, Centrica’s share of the regulated asset base is expected to reach £3 billion, supported by gearing levels around 65%.

Analysts are optimistic. RBC’s Alexander Wheeler noted that the project’s structure under the regulated asset base (RAB) model offers attractive returns and risk protection. Jefferies analysts echoed the sentiment, estimating a net present value benefit of 20–25 pence per share—well above their previous projection of 14–15 pence.

They cautioned that full market recognition may take time due to potential variability in implementation scenarios, but acknowledged the deal as a clear positive for Centrica’s long-term growth and income outlook.

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