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Most U.K. Coal Power Plants Seen Shut by 2023 on Climate Rules

July 10 (Bloomberg) -- The U.K. will close most of its coal-fired power plants by 2023, leaving only three in use, as environmental rules take effect, according to the operator of the country’s electricity grid.

All of National Grid Plc’s projections envisage “very aggressive” shutdowns of coal stations after climate regulations come into force in 2016, Richard Smith, the company’s head of energy strategy and policy, told reporters in London yesterday. The coal plants will be replaced by natural gas-fed generation, according to the company.

“The closure of the coal power stations means that additional generation is required to maintain the security of supply standard, resulting in new gas-fired generation commissioning, particularly from 2018-19 to 2021-22,” National Grid said in a report published today.

The shutdowns call into question whether new gas plants can come online quickly enough during this decade’s second part to replace coal generation, National Grid said in the report. The U.K. will have no connected coal-fired power stations operating after 2030 because of the requirements of the EU’s Industrial Emissions Directive and a drive toward increased renewable generation, it showed.

The U.K. has shut 8.2 gigawatts of coal generation since December 2012 because of European Union rules intended to curb carbon emissions, leaving a further 13 gigawatts at risk of closing by 2023 under different regulations. One gigawatt can supply about 2 million European homes.

Wind, Hydro

Coal-fed generation supplied 37 percent of U.K. electricity in this year’s first three months, compared with 23 percent for gas, according to the Department of Energy and Climate Change. The nation generated 19 percent of its power from wind, hydro and bioenergy in the period, the data show.

Coal for delivery to northwest Europe next year fell 35 percent since the start of 2011 to $77.95 a metric ton, more than the 12 percent drop in the same span for gas for delivery next winter. Coal prices will rise through 2035 amid stronger Asian demand to as much as $180 a ton, National Grid said. U.K. wholesale power prices will climb as high as 100 pounds ($171) a megawatt-hour by 2028 from about 34 pounds now as profit margins narrow and coal plants shut, the report showed.

To contact the reporters on this story: Rachel Morison in London at rmorison@bloomberg.net; Anna Shiryaevskaya in London at ashiryaevska@bloomberg.net

To contact the editors responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net Dan Weeks, Rob Verdonck

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