Coal Fired Power Dominates UK Generation Mix

From Platts

By Jillian Ambrose

UK electricity generation shifted further from gas-fired power towards coal-fired generation in 2012, a trend that looks set to continue in 2013 as rising gas prices erode the profits of combined cycle gas turbine use — allowing coal burn to soar in line with falling fuel and emissions allowance costs.

In addition, growing renewable energy capacity has increased the variability of the energy mix due to the intermittent nature of wind generation to allow for a year of record lows and highs for gas-fired power as well as oil-fired generation late in the year.

Official figures from the UK’s Department of Energy and Climate Change showed that gas burn had fallen 40.9% to 22.83 TWh by the third quarter of 2012, paving the way for ever higher year-on-year coal burn.

Coal-fired power rose by 49.9% from the same quarter the previous year to 28.66 TWh in Q3, on the back of favorable clean dark spreads — the difference between the price of power and the cost of coal and carbon. (See related chart: UK clean dark spread (GBP/MWh): January 3 – December 31, 2012).

The Platts clean dark spread assessment measures the profitability of month ahead power generation produced at a 35%-efficient coal-fired power plant and shows steadily growing incentive for generators to turn to coal-fired power.

In January 2012 the average clean dark spread price was GBP8.21/MWh according to Platts data, with prices climbing higher month on month to almost double by May when the assessment averaged GBP15.35/MWh.

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