British Energy's woes to push up power prices:
Problems with British Energy's nuclear power plants will probably push up UK power prices and could, at worst, pose risks to power supply security, according to consultants Wood Mackenzie. The loss of power supply is also likely to push gas prices higher as gas-fired power plants try to make up the nuclear shortfall, Wood Mackenzie said on Wednesday. Last week British Energy, which usually supplies about 20 percent of the UK's electricity, said it would close two nuclear reactors after finding cracks in boiler pipes at similar plants. It also said other problems at its Dungeness plant in Kent would probably cut the amount of power it could produce. "This will put upwards pressure on power prices and increase the call on gas-fired power plants which will also put upwards pressure on gas prices," Stewart Grey, a senior European gas and power analyst at Wood Mackenzie said. The Wood Mackenzie report said a likely loss of up to three gigawatts of baseload power could shrink the UK's power supply cushion the difference between maximum output and peak consumption to just over 16 percent from about 22 percent. While the report said that while this level should not cause supply problems, up to six gigawatts of nuclear plant could be put out of action, slashing the comfort zone to 11.4 percent. "There could even potentially be risks to security of supply for both gas and power, although this would require a fairly unlikely ‘worst case' combination of plant outages and cold weather," Grey said. Chris Murray, director of network operations at grid operator National Grid), told Reuters on Tuesday that British Energy's nuclear power plant problems were of concern. But Murray said the large size of the UK's supply cushion, the plant margin, which was at about 22 percent until the full extent of British Energy's problems became known, should mean the country can cope this winter. "As system operator, I would always want to see something that was 20 percent or north of 20 percent," he said. "Why on earth do you want a 22 percent plant margin? Well, it's for precisely this sort of event." Even with 2.5 gigawatts of capacity at Hinkley Point power station in England and Hunterston in Scotland out of action, plant margin would only fall to about 18 percent, he added. Wood Mackenzie's figure of 3 GW offline includes an expected 50 percent reduction in capacity at Dungeness, "reflecting its expected unreliability." One of the two reactors at the Dungeness B power plant is still closed for maintenance after the other unit was brought back last weekend. British Energy said last week Dungeness could suffer prolonged outages until next year because of fuel system glitches. Nuclear plants usually produce about 20 percent of the country's power steadily, while other more flexible generation types raise or lower their output as required. But the closure of Hunterston and Hinkley Point, because of boiler cracks, combined with the unrelated problems at Dungeness, could make other generation types take up the slack. Graham Tyler, a senior analyst at Wood Mackenzie, said that last winter gas-fired plant was switched off in favour of other fuels, as high gas prices caused by tight supplies made gas-fired generation less profitable. But this is no longer so easy. "The need for gas-fired generation to make up the nuclear shortfall will mean that the power sector will not be able to provide the same flexibility to the gas market as it did last winter," said Tyler. 26.10.06