* Gas burn in power plants to rise 18 pct this summer
* Centrica returns Barry plant to open market
* Only flexible plants will benefit
By Karolin Schaps
LONDON, April 18 Closing coal fired power
stations mean a return to life for some British gas fired plants
and a rise in gas use for electricity generation for the first
summer in three years.
High gas and low electricity prices in the wholesale market
have eaten into profits from burning gas for power production,
but EU environment rules have forced more coal closures with
reliable gas supply likely to be the winner rather than variable
Over the past month, Britain has already lost more than 5
gigawatts of coal-fired power plant capacity due to the expiry
of operating hours given under EU-wide pollution rules and
another 7 GW of capacity is scheduled to close by the end of
"A number of coal plants are expected to close, leading to a
higher dependence on gas to last summer," Britain's network
operator National Grid said in its summer market outlook.
It expects gas demand from Britain's power plants to rise to
9.8 billion cubic metres this summer, up 18 percent from summer
2012 and the first year-on-year summer demand rise since 2010.
Many operators of gas-fired power plants have temporarily
closed plants or reduced capacity, laying off workers, because
they were losing money, but a greater need for reliable power
capacity to fill supply gaps could now help return some plants
"If prompt (power) prices start to rise, that may encourage
owners to bring their plants out of preservation to be ready to
catch small spikes in value," said one operator of gas-fired
power plants in Britain.
Tighter supply margins due to the coal plant closures are
likely to lift power prices in order to encourage spare plant
capacity to connect to the grid. At the same time UK gas prices
could also find support from higher demand in power plants.
A rise in power prices will significantly improve the spark
spreads, the measurement used by power plant operators to
determine their profits from burning gas for power production,
which have been weak for around two years.
Forward peakload spark spreads, for power produced during
the day's high demand time, are already trading 50 percent above
British utility Centrica has mothballed a number of
its gas plants.
Earlier this month, however, it returned its 235-megawatt
(MW) Barry gas-fired power plant to the open market after a
supply contract with the network operator expired.
It is now operating in the balancing market, meaning it
offers its output to fill short-term supply gaps.
A spokesman for the 1,000-MW Barking Power gas plant, 60
percent of which have been in preservation mode, said it could
offer its full capacity to the market within two weeks if
He said he was unable to forecast whether the plant would be
running at full capacity this summer.
"It would depend upon UK demand and supply and events that
have an impact on that."
However, not all gas plants will be able to benefit from the
supply gap created by coal station closures.
Only those that can respond to sudden demand needs at very
short notice will be able to take advantage of requirements in
the short-term balancing market.
GDF Suez, for example, stopped production at its
huge 1,875-MW Teesside gas-fired power plant over the past
month, saying market conditions had not improved since the
station's capacity was reduced to 45 MW two years ago.