Coal share of power generation said to fall

14/01/2008 14:33

LONDON (Reuters) - Coal’s 36 percent share of the fuel mix used in power generation will shrink in the next decade but it will continue to be needed for this purpose in the forseeable future, utilities and analysts said.

"We’ve seen more interest during the past 12 months for new coal-fired plant but, on balance, it’s unlikely that coal’s share of the mix will be maintained," said Peter Osbaldstone, Senior Analyst European Gas and Power at Wood Mackenzie.

Utilities that are planning to build coal plants, to replace some of their ageing fleet, agreed with this view.

"Coal-fired plants for baseload generation are still going to be needed in the UK but of all the proposed new coal plant, probably less than half will actually be built," one utility source said.

Coal-fired plants which have opted out of the European Union’s Large Combustion Plant Directive do not have to fit equipment to capture sulphur emissions.

Plants without sulphur-removing equipment can run for a maximum of 20,000 hours between 2008-2015 before closing.

Energy regulator Ofgem said in November that UK oil and coal-fired plants with total capacity of 12 gigawatts had opted out. Of these, 8 GW are from opted out coal-fired plants, analysts and utilities said.

Currently there are proposals for new coal-fired plants with .....continued below

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a combined capacity of around 8 GW. (Please see tables below)

"Probably some of these will come on stream but most will fall by the wayside and some on the list already have. I’d say no more than 4 GW, half what’s proposed, is likely to be built," one utility source said.

"Gas plants are cheaper to build. The generation gap will be filled by gas, not coal. There’ll be maybe 2 GW of new coal-fired at most," another utility source said.

Gas fuels around 40 per cent of power generation, utilities said.

Generators will want to keep coal as part of a mixed portfolio that will also include nuclear power and renewables, utilities and analysts said.

The government’s proposed funding for the construction of a clean coal plant which includes carbon capture and storage (CCS) has encouraged a number of utilities to come up with plans, they said.

But since the government’s decision only to fund CCS which captures carbon dioxide from flue gas emissions, rather than extracting it prior to combustion from coal turned into gas, some utilities have lost interest. They had proposed different technology.

The 8 GW of opted out coal-fired plants, according to analysts and UK utilities, are:

Cockenzie - Scottish Power Ferrybridge stack two - Scottish & Southern Energy Ironbridge - E.ON Didcot - RWE Tilbury - RWE

Kingsnorth -E.ON

Currently proposed new coal-fired plant with a combined capacity of around 8 GW are:

Teeside - Centrica Hatfield - Powerfuel

Killingholme - E.ON

Kingsnorth - E.ON

Tilbury - RWE demonstration facility

Scottish & Southern also proposed a clean coal facility

(Reporting by Jackie Cowhig, editing by Anthony Barker)

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