Carola Hoyos The farewell of dirty UK power plants comes at a price

Many of the UK’s eight old, dirty power plants that signed their death warrant last year by opting out of the EU’s Large Combustion Plant Directive may not survive until their expiry date of 2015, say analysts at Inenco.

The plants (Grain, Ironbridge, Kingsnorth, Didcot, Fawley, Littlebrook, Tilbury and Cockenzie) were all given a maximum of 20,000 hours of life in return for their escaping the expensive facelifts that are making other plants less polluting. The idea was that this amount would let the ‘opt-out’ group live another seven years. But four of them have already used up 6000-8000 of their hours, suggestion they may find eternal rest far sooner. There was a flurry of stories on possible shortages last summer.

The concerns, coupled with price spikes in the wholesale electricity market, arose when the ‘opt out’ plants were doing double time to fill in the supply gap left by those power plants being taken offline while they were busy being upgraded into environmentally friendlier versions of themselves. Unforeseen outages added to the problems.

Since then the story has not been less hot because supply has been steady and the economic downturn has eaten away demand. But it would be a mistake to get complacent now.

Dilly dallying on investments in new nuclear capacity and renewable energy because the two seem less urgent or because the economics are no longer as good would be unwise, Inenco’s analysts warn.

They point out (and industry executives agree) that we are still only a power plant failure away from a significant rise in prices – if not a price spike. On top of that, replacing these old clunkers, which make up as much as 20-25 per cent of UK power consumption depending on the season, with nuclear and wind raises reliability issues. Wind doesn’t always blow and nuclear power plants aren’t particularly nimble responders to sudden surges in demand.

Ian Parrett of Inenco says: “If the opt out plants burn through their allowed hours earlier than expected, then concerns about security of supply are likely to push market prices higher.”

The utility companies themselves are less concerned, noting that new gas-fired powerplants, which are less polluting than their coal brethren, could fill any gap.

Nevertheless maintaining a watchful eye would be well advised. As with oil, when prices are high politicians shout about energy security. But low price environments are much more dangerous because it is precisely when we are not paying attention that we sow the seeds of insecurity.