LONDON, May 31 (Reuters) - Coal accounted for 46 percent of Britain’s power production in the first quarter, a six-year high share, the UK energy ministry said on Thursday, as cheap coal prices encouraged utilities to switch from burning natural gas.
Gas-burning plants can earn about 2.65 pounds ($4.12) per megawatt hour (MWh) of baseload power, while the margins for coal are 13.50 to 19 pounds per MWh, according to calculations based on Thursday’s prices in the futures market for both fuels for the next five months.
Figures from the UK’s Department of Energy and Climate Change (DECC) showed that coal-fired plants boosted output by 20.2 percent, or 6.5 terawatt hours, in the first quarter, to reach the highest contribution since 2006.
Supply from gas-fired power stations fell to its lowest share in 14 years at 25 percent.
Gas usage fell by 32.2 percent, or 10.9 terawatt hours, to its lowest level since May 1998, DECC said.
Britain’s six dominant utilities, Centrica, E.ON , EDF, Iberdrola, RWE and SSE, as well as independents such as Drax and Intergen, expect difficult operating conditions for gas-fired power producers through 2016, analysts at Nomura said this week.
Total electricity generation in the quarter was 91.06 teraway hours, down slightly from 93.91 TWh in first quarter of 2011.
The comparative profitability of burning coal versus gas cited above incorporates the current cost of carbon emissions at about 6.35 euros ($7.87) per tonne.
($1 = 0.6438 British pounds)
$1 = 0.8069 euros editing by Jane Baird