Centrica makes U-turn on UK nuclear plant plan

British energy company Centrica on Monday said it was pulling out of a joint-venture deal to build up to four nuclear power stations in Britain, citing the project's rising costs. Centrica's partner, state-owned French peer EDF, said it remained committed to the project, while Britain's government sought to brush off the snub, insisting that it was determined to make the country a magnet for nuclear power investment. Centrica said it had instead decided to return £500 million ($786 million, 580 million euros) to its shareholders by repurchasing shares. "We believe that nuclear generation has a valuable role to play in a balanced UK energy mix," Centrica chief executive Sam Laidlaw said in a statement. "However, since our initial investment (nearly four years ago), the anticipated project costs in new nuclear have increased and the construction timetable has extended by a number of years. "These factors, in particular the lengthening time frame for a return on the capital invested in a project of this scale, have led us to conclude that participation is not right for Centrica and our shareholders," he added. EDF said in a separate statement that it "respects Centrica's strategic decision not to take up its option of a share in the project." EDF added that it remained on track to build the first of Britain's new generation of nuclear plants at Hinkley Point in Somerset, western England. Already last year, German energy giants E.ON and RWE pulled out of their British nuclear power joint venture, Horizon Nuclear Power, citing the global economic crisis and the phasing out of nuclear power in Germany. In October, Japan's Hitachi agreed to buy Horizon for just over $1.0 billion. Britain has placed nuclear power at the heart of its low carbon energy mix and its current plants, home to 17 reactors in total, provide about 20 percent of the country's energy. Following Centrica's announcement Monday, a spokesman for the Department of Energy and Climate Change said: "We are determined to make the UK a leading global destination for investment in new nuclear, which will play a key role in our future energy mix. "We welcome EDF Energy's continued commitment and determination to take forward the Hinkley Point C project. "The decision by Centrica reflects the company's investment priorities and is not a reflection on UK Government policy. The recent purchase of Horizon Nuclear Power by Hitachi is clear evidence of the attractiveness of the new nuclear market in the UK," he added.