At Centrica we live by our Purpose – ‘energising a greener, fairer future’ – because we believe in energy that works for colleagues, customers and communities, today and into the future. It’s why we exist. Our strategy is driven by our Purpose, and our enduring values underpin how we operate.
Centrica in numbers
21,000
Employees worldwide
7,000
Engineers
7,200
Volunteering days
Top 50
Ranked in The Times Top 50 Employees for Gender Equality
13.0GW
Route to market for renewables under our management
Our strategy is driven by our Purpose of energising a greener, fairer future for colleagues, customers and communities.
Our Strategy
Since 2020, Centrica has been on a journey to simplify and
de-risk our business, strengthening our balance sheet and delivering material performance improvements along the way. In our Interim Results announcement in July 2023, we laid out our disciplined capital allocation framework, which comprises five key elements:
1. Sustainable earnings
We expect to deliver around £800m of operating profit from our Retail and Optimisation businesses by 2026, with material cash generation expected from our Infrastructure businesses over the medium-term.
2. Maintaining a strong balance sheet
We aim to maintain a Net Debt / EBITDA ratio of <1, which provides enough of a buffer to ride out any energy market volatility and provides flexibility to invest in the future and maintain and grow our shareholder distributions.
3. Progressive dividends
We maintain a progressive dividend policy and expect dividend cover from earnings to move to 2x coverage over time.
4. Investing for value
We aim to deploy £600-800m per year to 2028, focusing on assets that generate attractive returns, complement our existing capabilities, provide balance to the portfolio, and align to the needs of the energy transition.
5. Returning surplus capital
In July 2023, we increased our share buyback programme to £1bn since November 2022. Any future distributions will be reviewed against our revised capital framework and future outlooks.
Our Strategic Framework
Infrastructure
Investing to build a low carbon, reliable energy system including power generating renewables, flexible peaking generation and energy storage through batteries.
Retail
We remain relentlessly focused on providing a leading customer service and experience, helping them to save money and decarbonise through innovative offerings.
Optimisation
We are supporting the responsible buying and selling of energy, managing risk across our business and accessing value from green generation in our trading business while continuing to build out the flexibility required for the future energy system.
Evolving market conditions
After a tumultuous year in UK energy markets, 2023 saw market volatility return to pre-energy crisis levels, although energy prices remained relatively high. Consumer energy bills were somewhat shielded through the Energy Price Guarantee during the first half of 2023. Macroeconomic conditions, including elevated inflation and interest rates, negatively affected asset returns and capital costs.
How we’re responding
- Our vertically integrated model has allowed us to capture value across our business, demonstrating the benefits of having a balanced and diversified portfolio
- The progress we have made in strengthening our balance sheet will allow us to continue to invest in a diversified asset portfolio despite the challenging investment environment
- Our strategy is designed to remain robust under all market conditions, and positions us for growth and value creation
Macro Trends
The drive to net zero
Climate change and the imperative to decarbonise remain central concerns for our customers and key stakeholders across society. The last several years have brought the impacts of climate change to our doorstep, as we’ve experienced hotter summers, extended droughts, unprecedented flooding and extreme weather with increasing frequency. As a UK and Ireland energy industry leader and a responsible business, our strategy remains focused on the drive to net zero.
Macro Trends
Enabling system flexibility
Unlocking the full benefit of renewables will require more fast-acting generation and storage, flexible energy consumption, and intelligent systems working in the background to seamlessly manage the two. Centrica already plays a key role in this area by optimising energy flows to and from grid-side assets, as well as within the home. Through further investment and continued customer engagement, we will continue unlocking opportunities for flexible energy generation and use to reduce cost and carbon.
Macro Trends
Opportunities to deliver value with AI
Customers rightfully expect a lot from their home energy and services providers, which drives competition in the market and requires us to constantly innovate and improve. With recent advances in artificial intelligence and machine learning, we see an opportunity to further leverage the power of technology and data to create a step change in our service delivery and customer value proposition.
The drive to net zero
How we're responding
- We committed to an ambitious investment programme that aims for >50% of total capex invested in green taxonomy investments through 2028, thereby underpinning our transition to net zero
- We created a new business intended to be a one-stop green home services shop for residential customers
- We are working with partners to explore decarbonisation opportunities for our existing conventional power generation and molecule storage assets
Enabling system flexibility
How we're responding
- We create additional value for renewable asset operators and investors through our advanced trading and optimisation business
- We help customers to reduce the cost and carbon footprint of their biggest household energy devices, like electric cars and home batteries, through British Gas and Hive’s myriad of smart energy propositions
- We are investing in batteries and gas peakers to meet the near-term flexibility needs of the grid, and looking into other forms of energy storage that will meet the needs of the future energy system.
Opportunities to deliver value with AI
How we're responding
- We appointed a Chief Data Analytics Officer, who will work across the business to identify and execute on opportunities that harness the power of data to personalise our propositions and service delivery
- We are closely collaborating with leading technology companies to implement AI tools and systems across our business, helping our colleagues to do more and better for our customers
- We are in the midst of a digital transformation that will fundamentally change the way we work in the digital environment, providing material cost savings to the business and unlocking new capabilities needed for future propositions
Pathway to Parenthood
In June 2023 we launched our biggest support package yet to help our colleagues who are struggling with fertility.
Pathway to Parenthood
Our ‘Pathway to Parenthood’ package, which is available to all our UK employees as part of their healthcare plan, offers comprehensive financial support towards fertility treatment. This can be used for IUI, IVF, and egg or sperm donation and storage. It can also be used to cover costs for adoption or surrogacy. Additionally, we offer colleagues five days paid leave for their fertility treatment, adoption, or surrogacy appointments per year. We are already seeing the positive impact that the package is making, helping our employees feel supported whilst they go through huge changes in their personal lives.
Annual Report 2023
We put colleagues and customers at the heart of everything we do.
