November 29, 2016 / 2:31 PM / a year ago

Uniper says Ratcliffe coal plant in UK could run beyond 2025

LONDON (Reuters) - German utility Uniper aims to operate its Radcliffe coal plant in Britain for as long as possible, its UK chairman said, even though the British government plans to close all coal plants without technology to capture carbon emissions by 2025.

The UK government has launched a consultation on its plan to close coal plants by 2025 which do not have carbon capture and storage (CCS) technology to trap and bury emissions.

However, it said action would only be taken if there are no risks to Britain’s security of electricity supply. The country could face electricity shortages by the 2020s as coal plants close without replacement plants being built.

“Ratcliffe is running very efficiently,” Felix Lerch, chairman of Uniper UK, said in an interview on the sidelines of a conference this month. “We want to run it for as long as possible.”

Uniper is the power plant and energy trading unit spun off by German utility E.ON.

Its 2-gigawatt Ratcliffe-on-Soar coal plant opened in 1968 but it could stay open beyond the government’s 2025 deadline if there is a risk to electricity supply security, Lerch said.

Uniper says Ratcliffe is the cleanest coal plant in Britain, compliant with EU emissions regulations and capable of reducing nitrous oxide emissions by up to 80 percent from 2008 levels.

“The UK needs to balance its objectives of reducing carbon emissions with the equally important goal of ensuring security of supply,” Lerch said.

“But for this to happen, we need a clear framework for a fully managed transition and the government’s consultation on coal generation should provide this framework,” he said.

Lerch said Uniper would be offering input to the consultation on how Ratcliffe could keep running post-2025 if it is not fitted with CCS, which remains expensive and not widely used on a commercial scale.

Uniper’s power stations continue to face margin pressures because the spreads between fuel costs and market prices have not moved much, its chief executive said last week.

The UK government’s capacity market mechanism, which pays power plant owners to provide electricity at short notice, is also aimed at encouraging investment in new plants, but it has so far failed to deliver.

“I think it’s clear that the industry regards the current prices as lower than are needed to encourage new gas build,” Lerch said.

That price is estimated at 40-50 pounds per kilowatt-hour (KWh), which is more than double last year’s capacity auction clearing price of 18 pounds/KWh.

A draft law due from the European Commission on Wednesday is expected to set stricter rules on capacity mechanisms which would limit the use of coal-fired plants as backup for renewables.

Editing by Jason Neely

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