Centrica plc (CNA.L): BCG Matrix [Dec-2025 Updated]

Centrica's portfolio is being actively reshaped-high-growth Stars like energy trading, flexible generation, smart meters and Sizewell C are where the group is plowing cash and balance-sheet strength, while robust Cash Cows in British Gas and existing nuclear fund buybacks, dividends and a £4bn green investment pipeline; nascent Question Marks (carbon storage, hydrogen, LAES and business solutions) carry big upside but need policy support and capital, and legacy Dogs (aging upstream, non‑hydrogen plants and struggling services) are being exited or run for cash to recycle into decarbonisation bets-a clear strategic tilt from fossil legacy to scalable, regulated and flexible low‑carbon assets.

Centrica plc (CNA.L) - BCG Matrix Analysis: Stars

Stars

Centrica Energy Marketing and Trading (EM&T) operates as a Star within Centrica's portfolio driven by high growth potential in volatile global LNG, gas and power markets. EM&T reported an adjusted operating profit of £307 million for the full year 2024 and contributed £65 million in H1 2025 despite unseasonably warm weather and challenging trading conditions. The business is expanding into North America with its first US office opened in New York in 2025 to capture a larger share of global LNG and power flows. EM&T manages a diverse portfolio of renewables-backed and flexible capacity which grew 2% year-on-year to support the green transition. The medium-term sustainable operating profit target is £250-£350 million. Centrica's adjusted net cash of £2.5 billion as of June 2025 provides balance-sheet firepower to fund strategic market entries and position EM&T as a high-growth engine for the group.

Key strategic drivers for EM&T:

• Geographic expansion: New York office (2025) to access North American LNG and power markets.
• Portfolio diversification: Renewables and flexible capacity to hedge volatility and support decarbonisation.
• Balance-sheet support: £2.5bn adjusted net cash to underwrite market entry and trading scale-up.
• Profitability target: £250-£350m medium-term sustainable operating profit.

Flexible Generation and Battery Storage assets rank as a Star because they sit in a high-growth decarbonising energy market and require significant capital allocation. Centrica has committed to a £4.0 billion green-focused investment strategy through 2028, with over 50% targeted at green activities. In 2025 Centrica began commercial operations at Brigg Energy Park: a 50MW peaking gas plant plus a 50MW battery storage system with an expected return of ~8%. Separately, Centrica is investing €380 million in two 100MW hydrogen-ready gas peaking plants in Athlone and Dublin, scheduled for commissioning in late 2025. Long-term capacity market contracts underpin cashflows-e.g., a €28 million per annum contract for the Irish peaking plants-reducing merchant volatility and supporting project returns. The segment benefits from increasing market share in flexible infrastructure as the grid requires more dispatchable, fast-ramping capacity to integrate intermittent renewables.

Key attributes of the Flexible Generation & Storage Star:

• High growth: Increasing demand for dispatchable and storage assets as renewables penetration rises.
• Capital intensity: Large upfront investment (£4.0bn programme), with over half allocated to green activities.
• Revenue stability: Long-term capacity contracts (e.g., €28m p.a.) improve cashflow visibility.
• Tech & fuel optionality: Hydrogen-ready design supports future fuel switching and decarbonisation.

The Smart Meter Asset Provider (SMAP) business is a Star in Centrica's retail portfolio, delivering high-growth, recurring, low-risk revenues from owned smart meter assets. As of December 2024 Centrica managed 447,000 owned meters and is on track to reach 1,000,000 meters under management by 2028. The business targets a nominal post-tax unlevered return of ≥9%, producing a predictable income profile. Centrica plans annual investment into this segment of between £100 million and £200 million to scale deployment and retain leading position in the UK's digital energy infrastructure. Government mandates for smart meter rollouts underpin long-term market growth through the end of the decade. By December 2025 this unit is positioned as a critical data asset enabling data-driven decarbonisation services to Centrica's ~10 million customers.

Key strategic advantages of the SMAP Star:

• Regulatory support: Government smart meter mandates drive sustained market growth.
• Predictable returns: ≥9% post-tax unlevered returns with recurring revenue profile.
• Scale-up investment: £100-£200m p.a. to secure market leadership and integration into service offerings.
• Data monetisation: Enables value-added energy management and decarbonisation products for ~10m customers.

Sizewell C nuclear investment is classified as a Star, providing long-duration, low-carbon baseload capacity and regulated, predictable returns. In July 2025 Centrica announced a capped £1.3 billion equity investment in the 3.2GW Sizewell C project, securing a 10.8% real allowed return on equity. Projected internal rate of return (IRR) exceeds 12%. Sizewell C is expected to supply zero-carbon power for approximately 6 million UK homes over a >60-year operational life. The investment structure delivers predictable regulated returns during construction and operation, aligning with Centrica's 'investing for value' priority. The project supports thousands of jobs and apprenticeship opportunities, reinforcing Centrica's strategic role in national energy infrastructure and the UK's net-zero 2050 pathway.

Sizewell C Star highlights:

• Baseload security: 3.2GW of low-carbon capacity materially supporting UK supply mix.
• Regulated returns: 10.8% real allowed ROE with project IRR >12%-strong financial profile for long-duration asset.
• Strategic alignment: Supports net-zero 2050 and national energy security priorities.
• Socioeconomic impact: Thousands of jobs and apprenticeships during construction and operation.

Centrica plc (CNA.L) - BCG Matrix Analysis: Cash Cows

Cash Cows

British Gas Energy Residential remains the dominant market leader and primary cash generator for the group. The segment maintained a 23.1% share of the UK household energy market, serving approximately 7.46 million customers as of early 2025. Financial performance included an adjusted operating profit of £297 million in 2024 and resilient H1 2025 operating profit of £133 million. Market growth for traditional gas supply is low, yet the unit's scale and margin profile enable funding of Centrica's £2.0 billion share buyback programme and support of a progressive dividend policy. Management guidance targets a medium-term sustainable operating profit range of £150 million-£250 million for this unit, reflecting stable cash generation and limited incremental capital requirements.

Key attributes of British Gas Energy Residential:

• Customers: ~7.46 million (early 2025)
• Market share: 23.1% (UK households)
• Adjusted operating profit: £297m (2024); £133m (H1 2025)
• Medium-term target operating profit: £150m-£250m
• Role: Primary funder of share buybacks and dividends

British Gas Energy Small Business has emerged as a highly profitable and stable contributor to Centrica's retail segment. The unit delivered an operating profit of £46 million in H1 2025, up from £3 million in H1 2024, driven by improved operational efficiencies, commercial discipline, and a loyal SME customer base. This performance contributed to Retail adjusted operating profit of £354 million in H1 2025. The small business franchise operates in a mature market with modest growth but high margins and low incremental capital intensity, generating dependable cash flows that support Centrica's target of £1.6 billion EBITDA by end-2028.

British Gas Energy Small Business metrics:

Nuclear Operations (Centrica's 20% interest in UK existing nuclear stations) provide steady, low-carbon baseload power and significant dividends. Infrastructure adjusted operating profit stood at £789 million in 2024; output was broadly flat in H1 2025 due to planned outages, while dividends from associates supported group free cash flow of £244 million in H1 2025. Centrica continues to review life-extension options for operating stations to maximize cash-generative lifespan. Nuclear assets operate in a mature market environment with high barriers to entry, delivering predictable returns and limited organic growth - characteristics consistent with a Cash Cow used to fund the energy transition.

Nuclear Operations financial snapshot:

Bord Gáis Energy (Ireland) serves as a stable, high-market-share utility business with consistent returns. The segment serves over 500,000 customers and reported an adjusted operating profit of £63 million in 2024, with organic customer growth of 17,000 in H1 2025. Bord Gáis holds a significant position in the mature Irish gas and electricity markets and is integrated with Centrica's flexible generation investments in Ireland - notably Whitegate, which secured a €50 million per annum capacity contract. Bord Gáis underpins Centrica's €1.0 billion total investment plan in Ireland by providing reliable cash flow and supporting local generation economics.

Bord Gáis Energy key figures:

• Customers: >500,000
• Adjusted operating profit: £63m (2024)
• Net organic customer growth: 17,000 (H1 2025)
• Complementary contract: Whitegate capacity contract, €50m p.a.
• Role: Cash flow contributor to Ireland investment plan (€1.0bn)

Centrica plc (CNA.L) - BCG Matrix Analysis: Question Marks

Question Marks

Morecambe Net Zero Carbon Storage is a high-potential but nascent project based on conversion of depleted gas reservoirs to CO2 storage. A development licence was granted in May 2023. The project is a strategic partner of the Peak Cluster, targeting decarbonisation of roughly 40% of UK cement emissions associated with the cluster. Market forecasts for UK and European geological CO2 storage indicate multi-GW (multi-million tonnes per annum) capacity demand by the 2030s, but current commercial revenues are zero and Centrica's market share is effectively negligible in this emerging sector. Progress and future cash flows are contingent on the establishment of government regulatory models (e.g., contract-for-difference or storage-specific incentives). As a Question Mark it requires meaningful CAPEX to reach FID and commercial operations but could become a Star if policy and market pricing for CO2 transport and storage mature.

Collective characteristics of these Question Marks:

• High market growth potential: all target fast-expanding decarbonisation and long-duration energy markets (CO2 storage, hydrogen, long-duration electricity storage, integrated energy services).
• Low current relative market share: projects are early-stage or small relative to addressable markets (no material revenue from Morecambe, Rough hydrogen still nascent, LAES revenue pending, CBS profit small relative to TAM).
• Capital intensity: combined headline potential CAPEX exceeds £2.3bn (Rough ~£2.0bn + Morecambe £200m-£800m + LAES pipeline exposure £70m initial + CBS growth capex £50m-£200m).
• Policy and regulatory risk: commercial viability relies on UK government frameworks (CO2 storage payments, hydrogen offtake/regulatory support, market arrangements for long-duration storage).
• Technical and commercial execution risk: first-of-a-kind technologies and large conversion projects with multi-year timelines (Carrington completion 2026, Rough loss-making forecast 2025).

Project-specific financial and operational notes:

• Morecambe: zero revenue in 2024; requires CO2 transport and storage revenue model to underpin multi-hundred-million-pound CAPEX; potential to store millions tCO2/year across decades.
• Rough: expected adjusted operating loss £50m-£100m in 2025 driven by low seasonal gas spreads; Centrica seeks regulatory mechanism to unlock ~£2bn investment to convert to hydrogen-ready store; commercial breakeven tied to hydrogen market development to 2030 (10GW target).
• CBS: reported adjusted operating profit £73m in 2024; high growth rate in demand-side response, energy efficiency and onsite generation markets but market share modest versus TAM; pivoting into battery integration and higher-margin services to drive margin expansion.
• LAES (Carrington): Centrica invested £70m in 2024; plant capacity 300 MWh; scheduled commercial operation 2026; rights to a £9bn project pipeline contingent on technical scale and market adoption for weeks-long storage.

Key strategic actions required to convert Question Marks into Stars:

• Secure credible government support mechanisms (CO2 storage payment models, hydrogen revenue support, long-duration storage market design).
• Complete FEED and de-risk projects to attract co-investment or underwriting from institutional investors or partners.
• Scale commercial capabilities in CBS via targeted M&A, product differentiation (battery integration, software-driven optimisation) and margin-focused sales strategies.
• Pursue staged investment approaches and optionality to limit downside while preserving upside (phased CAPEX, milestone-based commitments).

Centrica plc (CNA.L) - BCG Matrix Analysis: Dogs

As Dogs within Centrica's portfolio, multiple legacy and low-growth assets are being actively de-emphasised or exited to free capital for higher-growth green initiatives. These assets exhibit low market growth rates, limited or declining relative market share, and substantial carrying or decommissioning liabilities.

Spirit Energy - Southern North Sea producing assets: Centrica has identified these assets as non-core and executed staged divestments. In early 2025 Centrica sold a 46.25% stake in the Cygnus gas field for £215 million; in December 2025 it disposed of the remaining 15% interest in Cygnus and other Southern North Sea assets to Serica Energy for approximately £98 million. The divestments transferred significant decommissioning liabilities to the buyer and reduced Centrica's 2P reserves by 15.7 mmboe in the latest transaction. These fields operate in a mature, declining UKCS market with low growth prospects and high unit operating costs, and are therefore classified as Dogs to be exited to recycle capital into renewables and low-carbon projects.

British Gas Services & Solutions: This mature HVAC and field service business operates in a low-growth market and has struggled with customer retention and margin pressure despite short-term top-line improvement. H1 2025 results showed c.4% revenue growth year-on-year and an improved operating profit of £42 million, but the segment lost approximately 65,000 customers in H1 2025. The business is under a major transformation programme to stabilise churn and reduce cost-to-serve, but until the programme delivers sustained high-margin performance the unit behaves as a Dog: low growth, limited market expansion potential, and high fixed cost from a large engineer fleet.

• H1 2025 revenue growth: ~4% year-on-year
• H1 2025 operating profit: £42 million
• Customer losses H1 2025: ~65,000
• Target: back within guidance range by 2026 (management objective)

Upstream oil & gas exploration and legacy production: Centrica has explicitly phased out traditional E&P activities as part of a strategic repositioning toward green energy and net-zero objectives. The remaining upstream portfolio (including legacy assets such as elements of the Morecambe Hub) faces high exposure to commodity price volatility and windfall taxes that adversely affected Infrastructure operating profit in 2025. Production assets are being managed for orderly exit, repurposed where possible (e.g., conversion of depleted reservoirs to carbon storage), and otherwise allowed to decline. These activities present low growth prospects, elevated environmental and decommissioning liabilities, and limited strategic fit.

Legacy gas-fired power plants without hydrogen readiness: Older gas-fired capacity that cannot be economically retrofitted for hydrogen or carbon abatement faces increasing regulatory and market pressures as the UK & Ireland target near-100% renewable/low-carbon power by 2030. These plants have declining utilisation, rising carbon and compliance costs, and low long-term market share within the future generation mix. Centrica is prioritising investment in hydrogen-capable peaking plants and treating legacy units as short-term cash generators to be retired or sold when feasible.

• Policy horizon: UK/Ireland decarbonisation targets toward 2030
• Economic pressure: rising carbon costs and lower spark spreads for unabated gas
• Strategic focus: shift capex to hydrogen-ready peaking assets

Implications and near-term actions across Dog assets:

• Capital recycling: realise proceeds from disposals (e.g., £215m + £98m realised in 2025) to fund green growth.
• Liability management: transfer or mitigate decommissioning and environmental liabilities where possible through sale agreements.
• Operational downsizing: reduce cost base in Services & Solutions via transformation programme to reach guidance by 2026.
• Repurposing: evaluate conversion of depleted reservoirs (e.g., Morecambe Hub) for carbon capture and storage to extract residual value.
• Strategic exit: prioritise sale or retirement of non-hydrogen-ready generation assets ahead of 2030 decarbonisation milestones.