Monday, 6 September 2010

UK faces winter gas demand hike from new plants

Britain faces a surge in gas demand this winter as at least three new
gas-fired power plants are expected to start operating before the end of the
year, Reuters research showed.
E.ON UK's combined-heat and power plant on the Isle of Grain, RWE's
Staythorpe combined-cycle turbine (CCGT) station and Dong Energy's DONG.UL
Severn Power gas plant are all expected to come into service before the new

Combined average demand from these three new plants, adding 3,734 MW in new
capacity, will require around 16.8 million cubic metres (mcm) of gas per day
in addition to standard winter consumption, according to Reuters research.

Current fourth-quarter spark spreads, which calculate the profit of burning
gas for power production, stand at 7.86 pounds per megawatt-hour (MWh),
compared with 7.82 pounds for coal-fired generation, showing it is more
profitable to run gas plants at the end of this year.

"Liquefied natural gas (LNG) terminals will be the main source of supply for
the additional demand this winter," said a gas market analyst.

British network operator National Grid forecast in a preliminary report that
LNG supply will average 60 mcm/day this winter.

"There are reasons to be more optimistic about LNG deliveries to the UK due
to a combination of: increased LNG production, limited recovery of global
demand and relatively high European gas prices," the report said.

Between October last year and March 2010, LNG sources accounted for 30
percent of British gas imports.

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