UPDATE 1-Britain faces 12 GW of power plant closures by end-2023 -data

Wed Mar 12, 2014 4:31pm GMT

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* List of plants wanting opt-out of EU directive published

* 12 GW of capacity could go offline-Reuters calculations

By Nina Chestney

LONDON, March 12 (Reuters) - Britain could face at least 12 gigawatts (GW) of power plant capacity going off line by the end of 2023 due to tighter European Union pollution regulation, Reuters calculations based on government data showed on Wednesday.

Britain is at risk of a severe power capacity crunch in the 2020s as ageing nuclear power stations come to the end of their life and coal and gas plants shut down because they cannot afford to add costly technology to reduce greenhouse gas emissions to comply with EU law.

Britain's Department for Environment, Food and Rural Affairs (Defra) has published a list of power plants whose operators have requested they are exempted from the EU's Industrials Emissions Directive - meaning they are not slated for expensive upgrades and will therefore close over the next nine years.

The list, which included plants run by SSE Plc, EDF and RWE, did not show any details of capacity which could be closed, but this number is important for the industry in order to calculate how much replacement capacity might be required.

Operators can still change their minds on the opt-out up until Jan. 1, 2016.

Under the EU directive, power plants in the bloc have to control and reduce the impact of their emissions on the environment. In most cases this involves retrofitting their plants with expensive technology.

Power plant operators have had to inform their relevant environment regulator about which stations have chosen not to install such technology.

Plants can run without upgrades for 17,500 hours starting Jan. 1, 2016, or to the end of 2023, whichever comes first.

Across Europe, power generators are shutting down or mothballing plants as they try to cut costs, after being taken by surprise by a surge in output from renewable energy sources, making many gas and coal plants redundant and leading to a collapse in wholesale power prices.

In Britain the situation is particularly acute.

"This (12 GW total) could tighten up capacity margins quite a bit by the end of the decade (from 2019) as the first plants go offline," said Trevor Sikorski, analyst at consultancy Energy Aspects.

Without any immediate replacements, Britain's energy watchdog Ofgen has warned blackouts might be possible and that avoiding supply shortages will carry a price.

A spokeswoman from the UK's Department of Energy and Climate Change said Britain is trying to build a "diverse, low-carbon and efficient energy mix to reduce our emissions and give consumers the best deal"