French state-owned utility EDF and UK energy company Centrica are close to agreeing a draft deal with the UK government to extend the operational life of the Sizewell B nuclear power station by 20 years, from 2035 to 2055, backed by a combined investment of approximately £800 million ($1.07 billion, approximately €990 million), as reported by Reuters.

Reuters reported that EDF and Centrica are nearing a heads-of-terms agreement with the UK Department for Energy Security and Net Zero, with a formal announcement expected within weeks. Under terms currently under discussion, Sizewell B would receive approximately £70 per megawatt-hour for electricity generated, providing long-term revenue certainty and reducing exposure to wholesale electricity price volatility.

Sizewell B, located on the North Sea coast in Suffolk, is Britain's only operational pressurised water reactor and supplies nearly 1.2 gigawatts of low-carbon baseload power to the national grid. A life extension is regarded as technically feasible, with the £800 million investment earmarked to fund engineering upgrades, inspections, equipment replacements and the regulatory work required to operate the plant safely for a further two decades.

An EDF spokesperson said: "Volatility in the energy markets over the past few years has reinforced the importance of securing a suitable model to reduce commercial risks and enable that investment decision."

Centrica holds a 20% stake in EDF Energy's UK nuclear generation business, which includes Sizewell B. EDF's British arm had confirmed in January that life extension negotiations with the UK government were under way.

The proposed deal would take the form of a Contract for Difference, a revenue mechanism used across the UK's low-carbon generation sector to provide investors with price certainty and reduce market risk.

Extending Sizewell B is viewed as a critical component of UK energy security strategy as older advanced gas-cooled reactor stations approach retirement. The UK government has separately committed to building new nuclear capacity at Sizewell C, in which EDF also holds a substantial stake, though that project remains in an earlier stage of development.

The Sizewell B extension would provide a near-term source of firm, low-carbon capacity while longer-term projects are developed and delivered.

Access the full details on the Sizewell B extension negotiations.