RWE npower plans to shut seven UK power plants by end 2023

LONDON (Reuters) - Energy supplier RWE npower said on Thursday it would shun costly retrofits required by European Union pollution laws on seven of its power plants in Britain, meaning they will close by the end of 2023 at the latest.

A worker walks at energy company RWE npower's new gas-fired Pembroke Power Station, in Pembroke, Wales September 19, 2012. REUTERS/Rebecca Naden

The EU-wide Industrial Emissions Directive (IED), which will come into effect in 2016, imposes limits on emissions of climate-harming gases, tightening already existing legislation.

Power plant owners in Britain had to tell the government before the start of this year how they would comply with IED.

They can either fit technology to curb emissions or choose a “limited life” option for plants where it is not economical to retrofit.

That option would allow a plant to continue to operate without adding further technology for a total of 17,500 hours or to the end of December 2023, whichever is earlier. The plant would then be closed down.

RWE npower - part of Germany’s RWE AG - said it chose the “limited life” option for seven of its plants: Aberthaw coal station; two units at Didcot B gas plant; Cheshire combined heat and power (CHP) plant; Conoco Phillips CHP; Grimsby CHP and Hythe CHP.

RWE npower can still change its mind about the plants but has to make a final decision by the end of 2015.

“We have thought long and hard about what is right for our business, our power stations, and our people,” Kevin Nix, managing director of the company’s Generation UK division, said in a statement.

“RWE has invested more than 5 billion pounds ($8 billion) into new power stations for Britain in the last 5 years. However, power stations across Europe are finding market conditions increasingly difficult,” he added.

At the end of last year, SSE also selected the limited life option for two of its coal-fired power stations in Britain, meaning they will close by end-2023.

Last year, an industry lobby warned Britain’s coal mines could see demand collapse in the 2020s if old power stations shun costly retrofits because higher fuel and carbon costs will make generation from the fuel uneconomic.

Without incentives such as minimum prices for coal-fired power and subsidies for technology to capture carbon emissions, observers have said utilities are unlikely to spend the hundreds of millions of pounds required to install equipment by 2020 to cut levels of pollution.

Reporting by Nina Chestney, editing by David Evans