Britain endured a bitterly cold start to 2025, with temperatures in the Scottish Highlands falling to their lowest on a January night for 15 years. 

February has been little better.

The prospect of spring arriving from next month may be welcomed by British Gas-owner Centrica, who said last month that Britain's levels of gas storage had fallen 'concerningly low' on the back of soaring demand during the cold snap.

Gas storage sites are operating with 26 per cent less gas than a year ago, according to Centrica, meaning the UK has just a week's worth of gas demand in storage.

While warmer weather will ease immediate pressure on the UK's largest gas supplier as high demand begins to subside, other pressures continue to weigh on the firm.

On Thursday the firm posted a sharp downturn in revenue, which fell to £19.9billion last year from £26.5billion in 2023, as pre-tax profits slumped from £6.5billon to £1.7billion.

The firm said these figures reflect a more 'normalised backdrop', with energy prices having come down from their highs of the past few years. 

But Centrica shares topped the FTSE 100 on Thursday, rocketing by more than 10 per cent at one point as the group revealed a a bumper share buyback plan and dividend hike.  

Pressures on infrastructure aside, the backdrop of sky-high energy prices has largely been a tailwind for Centrica and shares have risen more than 80 per cent over the last five years.

However, this belies the full picture.

Since its share price peaked at 402.2p in 2013, Centrica's value has been on a downward spiral.

It had lost more than 90 per cent of its value by April 2020, with shares worth just 31.84p each.

Even in 2025, the share price is a shell of what it once was, remaining 64 per cent lower than its 2013 high point. 

But is the tide finally starting to turn? 

Centrica suffers competition and ESG boom  

Centrica's fall from grace has its roots in the Electricity Market Reform of the 2013 Energy Act, which opened the gates to greater competition from smaller players in the market. 

The shift towards renewables and a decade of investor apathy towards traditional energy markets have also piled pressure onto the British Gas owner.

Russ Mould, investment director at AJ Bell, said: 'Centrica's long, grinding share price fall between 2013 and 2020 owed much to regulation, fierce competition and footloose competitors who were able and willing to switch energy provider.

'Weak natural gas prices were a further burden, and many investors' desire to run strict ESG screens led to their decision to shun Centrica because its ongoing oil and gas exploration work (even if the company has formulated a clear climate transition plan).'

The stock has been on the up more recently, though is yet to come close to recouping its previous losses over the past decade.

Sam North, market analyst at Etoro, said: 'Centrica's share price tells two contrasting stories: down nearly 70 per cent from its 2013 peak but up over 300 per cent from 2020 lows.

'The key question now: can it break the long-term downtrend, or is another selloff imminent?'

On the rise?

The surge in energy prices following Russia's invasion of Ukraine in 2022 saw many smaller energy providers, which had for so long proved a thorn in Centrica's side, left unable to cope with rising prices and ultimately collapsed.

This, Mould says, 'has enabled Centrica to fight back, even if Octopus has overtaken it to grab top spot in the domestic energy supply market'. 

He added: 'There are still six big providers, with British Gas ranked second, but it is less easy for customers to shop around and get a better deal.'

Etoro's North said: 'The company has strengthened its balance sheet, cut debt, and benefited from high energy prices, despite its retail business' struggles.'

But revenue per share has fallen while the stock has exhibited a high forward price to earnings ratio, indicating expectation that revenue could decline further.

However, as Mould notes, 'value hunters may be drawn to a forward price/earnings ratio of less than ten times for a company whose role in national infrastructure and national energy security could yet leave it well placed over the long term'.

Keith Bowman, equity analyst at Interactive Investor, added: 'The group's diversity of businesses regularly sees tough conditions for one area countered by strengths elsewhere. 

'Management continues to assess and invest in energy transition opportunities such as solar farms and carbon capture, while first half 2024 results flagged £3.2billion in net cash held – supportive of shareholder returns.

'In all, and aided by an estimated future dividend yield of 3.3 per cent, City opinion currently points to a long-term buy.'

UBS research shows Centrica is the most crowded long position in the utilities sector. 

The bank's crowding metric ranges between -30 and +30, with Centrica currently standing at +20, indicating a long crowding.

Crowded positions such as this can prove risky – if sentiment shifts investors could exit en masse and burst the bubble.

An average of 12 broker forecasts points to a target share price of 166.77p - 22.7 per cent above the current value of Centrica shares.  

The shift towards renewables

The ESG boom may have kept Centrica shares in the shade for a long period, but the company is doing its part in the transition towards renewable energy.

Centrica recently moved its net-zero target from 2045 to 2040, which it says will help create 6,500 jobs and help customers reach net zero by 2050. 

It is investing £600million to £800million per year on renewable infrastructure and supply security until 2028, including a £70million investment in a clean energy storage project announced last year.

North said: 'Centrica is investing heavily in renewables and flexible power, with over half its capital expenditure allocated to green projects.

'Its stake in UK nuclear assets strengthens its future role in the energy mix. However, risks remain: gas storage limitations, blackout threats, and regulatory uncertainty could impact profitability.'

This is a positive move for investors, according to AJ Bell's Mould.

'Investors have also begun to warm once more to the potential of Centrica's infrastructure assets, including its gas and carbon storage facilities and its stakes in nuclear power plants.'

Energy security is the buzzword 

The war in Ukraine had a crippling affect on many energy firms, not just in the UK, as western nations discovered just how fragile their energy supplies were.

It revitalised calls to onshore production and boost domestic energy security. 

Mould said: 'War in Eastern Europe and the Middle East, as well as sabre-rattling in the White House, have all heightened the importance of energy security for nations and Centrica can argue it is front and centre of potential solutions for the UK.'

The fears raised in recent weeks over the UK's lack of stored gas are borne not only out of fears of winter blackouts, but also what could happen if supplies are once again placed in a chokehold.

North said: 'Britain's inadequate gas storage capacity doesn't just threaten energy security—it also poses a significant risk to Centrica's financial stability and investor confidence. 

'With storage levels recently at just half capacity, Centrica has warned that even a brief cold snap or sudden demand surge could trigger supply shortages and extreme price volatility.'

Some 53 per cent of the UK's energy usage is currently reliant on natural gas.

'Unlike European counterparts with robust strategic reserves, the UK lacks mandatory storage targets, exposing Centrica to unpredictable market swings,' North said.

'The company's Rough storage site provides critical capacity, but future investment hinges on government support, adding another layer of uncertainty that could deter investors.'

The Rough gas storage site, located in the North Sea, is at risk of closure, just a few years after Centrica partially reopened it in 2022. The site accounts for around half of the UK's gas storage capacity.

The site is expected to make a loss of between £50million and £100million this year, chief executive Chris O'Shea said in December. 

Centrica says this isn't sustainable and is lobbying for Government investment to build what it claims could be the largest gas storage site in the world - and one that could be used to store hydrogen instead.

'For investors, this creates a precarious situation. Sentiment in energy markets can shift rapidly, and prolonged uncertainty over gas storage policy, energy price stability, and government intervention could weigh on Centrica's share price,' North said.

'Without clear assurances on long-term storage investment and regulatory support, investor confidence may wane, increasing volatility and making Centrica a riskier proposition in an already unstable energy sector.'

Gas storage currently proves a sticking point, and one that investors should be wary of. 

Though, with recent cold weather highlighting the UK's unstable energy security position, the winds – however cold they may be – might just be blowing in Centrica's direction.

Either way, North warns: 'While Centrica offers upside, investors should be cautioned by sector volatility, regulatory risks, and operational challenges. 

'Waiting for a lower entry point may be a smarter move, but even then, investors need to be comfortable with some volatility.'