Gas poses new threat to coal generation

National Grid projections see widespread change of fuels

Britain’s gas-fired power generating capacity will double to more than 27,000MW over the next three years, according to the National Grid.

Based on applications it has received for connection to the national transmission system, the Grid expects 14 more combined-cycle gas turbine plants to be in operation by 2000-01. These will increase total gas-fired capacity from the 14,328MW of 1997-98 to 27,420MW a year after the turn of the century.

The projection is ominous for the use of coal in power generation. A spokesman for National Power, Britain’s largest generator, said that while not all new capacity featured in the Grid’s past seven-year forecasts had ultimately been built, there was certainly a trend in the industry to build more gas-fired stations.

`Generally we think there is a good head of steam for more gas plant if the Government permits it. We share the concerns that coal will at least see its market halved by the end of the century.’

National Power would itself build the largest of the planned stations, a 1,500MW unit at Staythorpe, Nottinghamshire. Other big plants on the Grid’s list include 1,200MW units at Hams Hall outside Birmingham and at Enderby, Lancashire.

While few of the new gas-fired stations are likely to secure the long-term contracts that the first generation of gas-fired plants enjoyed, they are still likely to replace coal-fired capacity on the system, because the coal station set prices in the electricity pool. The gas fired plants tend to bid into the pool at zero and take the price bid by the last coal unit called on to the system.

While coal fired operators could lower their bids accordingly, it will be less damaging for them to cede further capacity than cut the price they receive for their entire output. If they were to drop pool prices drastically, they might invite the regulator to intervene on grounds of predatory pricing.

Britain’s largest coal producer, RJB Mining, remains convinced it will have a market in four years. A spokesman said Grid projections had varied `substantially with reality’ in the past while development of gas had not been as smooth as predicted.

By Andrew Cavenagh