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Almost 1GW of capacity comes to UK electricity grid in July

09 Jul 2012 18:41:11 | edem esgm

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More than 800MW of new combined-cycle gas turbine (CCGT) generating capacity will be added to the UK electricity grid by the end of July, as two new power plants are each due to finish commissioning a unit.

Three out of the five 400MW units at RWE's new Pembroke power station in Wales have completed commissioning and are in operation, a company spokeswoman told ICIS. A fourth unit is expected to finish commissioning at the end of the month, with the final unit expected to be operational by early September.

Meanwhile, EDF will complete the commissioning of the first 435MW unit of its new 1.3GW CCGT plant near Nottingham in 10 days, according to a company spokesman. EDF expects to begin commissioning the other two units by the end of October.

UK power traders said the imminent capacity increase had largely been priced into the market since the plants began commissioning the new units, with a 4.5% increase in capacity expected at the beginning of the year (see EDEM 12 January 2012).

One trader pointed to lacklustre Day-ahead spark spreads for the summer to date, which have shed 3.5% since the start of April (see graph). The lowest level for a next working day in the UK for the summer to date was £1.80/MWh on 1 May, according to ICIS data, although the average has been steadily dropping. In May, the average Day-ahead spark spread level was £4.195/MWh, while June averaged £3.996/MWh, and the month to date has averaged £3.163/MWh up to 6 July.

But the source cautioned that many other factors had influenced spot power and gas prices over the period, including volatile Brent crude prices and fears of a disruption in short-term gas supplies amid industrial action in Norwegian gas fields (see EDEM 5 July 2012).

Several other CCGT projects slated to come on line in the next two years will struggle to break even if spark spreads do not improve, and the same trend is true across Europe (see EDEM 23 May 2012). US-based generator Intergen is due to complete a 450MW CCGT unit at its South Holland project in late 2013, with a second 840MW unit expected to come on line a year later. E.ON UK is expected to finalise work on a 1.3GW CCGT plant near the former site of the Drakelow coal-fired power station in the East Midlands at the same time. KB

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