Centrica cuts back on unprofitable UK gas-fired generation

• 12 years ago (2012-02-28)
• Junior Isles

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Centrica Plc, the UK’s biggest residential gas supplier, may mothball a further three of its eight gas-fired power plants, after already announcing the closure of two.

Centrica announced the closure of its Barry and King’s Lynn plants in a statement. Its Peterborough, Brigg and Roosecote stations are now configured to run more flexibly and operate in the Short Term Operating Reserve market, the company said.

“Gas-fired generation is not making money at the moment,” Centrica Chief Executive Officer, Sam Laidlaw said at a press conference. “We’re shutting down two and we’ve moved three onto open-cycle.”

About 10 000 MW of coal-fired power plants are due to close by 2015 as energy providers attempt to comply with European Union emissions laws. The expected retirement of nuclear plants towards the end of the decade will also boost the need for new generation, Laidlaw said.

The UK’s reserve margin, excess generation capacity, stands at 32 per cent and UK electricity demand dropped about 4 per cent last year. Meanwhile, as much as 6500 MW of additional gas-fired capacity will have been added to the UK grid through 2011-2012, managing director Mark Hanafin said.

“What’s happening is the older plants are just not running,” Hanafin said. “The three plants being used to supply short-term generation needs will only continue operating if the company can continue winning contracts to do so… If we weren’t to win those contracts then those stations will be mothballed,” he said.

“At the moment you have no profitability in gas-fired generation, but if you roll forward towards the second half of the decade, the country is going to need more gas fired generation,” Hanafin said.