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Financial Times: Gas-fired power station given go-ahead

By Ed Crooks, Energy Editor
Published: August 21 2007 03:00 | Last updated: August 21 2007 03:00

A new gas-fired power station in south Wales has been given the go-ahead, marking the latest stage in what has been described as a fresh “dash for gas” by electricity generators.

Carron Energy, an independent generator and electricity supplier, has won approval from the Department for Business, Enterprise and Regulatory Reform for an 800MW, gas-fired power station at Newport, beside the river Usk. About 650 jobs will be created at the plant.

The plan is part of a wave of investment in power generation stimulated by the need to replace ageing coal and nuclear plants that are going out of service. About a third of the UK’s generating capacity is scheduled to shut over the next 10 to 15 years.

Alex Lambie, Carron’s chief executive, said: “There is a shortage of power coming in the UK and we want to be ready for that. . . There is not a lot of new build coming through at a fast rate, and we think there will be a window when there will be a tight market which will be commercially beneficial.”

The government hopes that a range of technologies will be used for the new power stations, including renewables such as wind and biomass, “clean coal” stations, which capture and store their carbon dioxide emissions, and nuclear power.

Since 2004 the UK has been a net importer of gas, and by 2020 it could be importing 80 per cent of its needs, so the government believes that considerations of energy security as well as its targets for reducing carbon dioxide emissions point to the need for diversity in the generation mix.

However, the electricity industry has a preference for gas-fired power stations, which are the cheapest and quickest to build. Carron believes its Newport plant will cost about £400m. The London Array offshore wind farm, backed by Eon and Shell, is planned to have a capacity only slightly greater at 1,000MW, but has been estimated as costing more than twice as much, at about £1bn.

Carron’s power station is expected to take 30 months to build, and to be in service in 2010. The first new nuclear power stations, even on the most optimistic projections and if given formal government backing by the end of the year, will not be in service until the end of 2017.

The Association of Electricity Producers says there is about 21,000MW of new generating capacity either approved or going through the planning process. Of this more than 14,000MW would be gas-fired, while the rest would be renewables and a 1,600MW coal-fired station planned by Eon.

Copyright The Financial Times Limited 2007

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