Low French spark spreads squeeze Brittany CCGT project
The low level of French spark spreads is causing concern for companies bidding in a tender to develop a 450MW natural gas-fired power plant in Brittany, ICIS Heren understands.
Baseload spark spreads for 2012 in France currently stand at around €1.30/MWh, some way short of the margin experts say is required to make a combined-cycle gas turbine (CCGT) project worthwhile.
ICIS Heren calculated the spread by setting the French Cal '12 Baseload against the TTF gas Cal '12 contract, assuming a gas-burn efficiency of 49.13%. In terms of the clean spark spread, Thursday's closing assessment of minus €2.83/MWh - taking a gas emissions intensity factor of 0.411 tonnes of CO2 equivalent/MWh - appears even less healthy.
It is estimated that spark spreads of €10.00-15.00/MWh are required to make any new gas-fired project worthwhile.
According to one analyst covering the French electricity market, the outlook for new gas-fired generation seems bleak, at least for 2012.
"There's huge overcapacity in the market at the moment," said the source. "If the government continues to ramp [up] renewables capacity, there will be overcapacity for a long, long time - I don't really see the situation changing dramatically in the meantime."
The analyst remarked that one possible scenario is for the companies concerned to join forces to lobby the government for energy subsidies to be extended to natural gas as well as renewables.
"They can say: 'Look, you need to give us money as well - you give it to wind and solar operators, but you need to subsidise us as well to counter the variability of renewable generation,'" he said.
After 2013, electricity producers will cease to get any free emissions allowances from the state. They would have to cover any emissions above their banked surplus of allowances - saved from the previous free allocation - by buying allowances either at auctions or in the traded market.
That extra carbon cost could lead to the retirement of a number of old thermal power plants in 2013, he said, so there could then be scope for new, more carbon-efficient plants.
Brittany is an area where blackouts have been relatively commonplace in recent years, especially during peak hours over the winter.
The announcement of a new CCGT project near Brest in June 2010 sparked interest from a number of players. Incumbent generator EDF plans to bid on the tender, as do GDF SUEZ, Italy's Enel and Direct Energie (see EDEM 27 September 2011).
The successful company will be announced early in 2012 and the power plant is scheduled to come on line in 2015.
The project has already come under fire from local residents (see EDEM 24 August 2011), who want the plant to be the subject of a discussion by France's national commission for public debate.
Gas-fired generation has been popular with French companies of late, despite the current spark spreads: EDF has committed to converting three 250MW oil-fired units at Martigues into two 465MW CCGTs, while Direct Energie has recently applied the finishing touches to a 840MW CCGT project at Sarreguimine (see EDEM 5 October 2011). TH
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22 Aug 2014 21:28