RWE to limit output at UK's Aberthaw coal plant

OREANDA-NEWS. April 26, 2016. German utility RWE will limit production at its 1.6GW Aberthaw coal-fired power plant in the UK from 1 April 2017 owing to challenging market conditions for coal-fired power generation in the country.

RWE plans to keep Aberthaw off line during most hours from the beginning of the 2017/18 financial year, but the capacity will remain available to transmission system operator National Grid during the periods when power supply margins are tightest during the winter, meaning that RWE will still meet its obligations under the capacity market.

"Today we have announced a change to our operating regime, which will focus on ensuring secure capacity is available when needed but with lower energy generation operations," RWE said.

Market conditions for coal-fired power generation in the UK have been hit by a hike in the country's carbon price floor last year and as weakness in European natural gas prices has left coal-fired plants struggling to compete. The 2017 dark spread for a coal-fired plant of 38pc-efficiency ended last week at around ?5.35/MWh, which would mean gas plants of 52pc-efficiency or higher would be more profitable to run.

"We must recognise that the current market for energy generation remains extremely challenging for coal generation over the coming years and is expected to be low compared with recent times. Against this backdrop we have to make decisions to future-proof our operations," RWE said.

The utility's Remit page said that Aberthaw's maximum export limit (MEL) — the highest amount of power that a generation unit is able to export to the transmission network at any one time — will be set to zero during most hours, reflecting the facility's unavailability to the grid. But the MEL will be adjusted to reflect availability during system stress events, RWE said.

RWE indicated that it will keep minimal coal supplies on site, which will restrict it from generating over "sustained periods". But the utility said that it plans to expand the range of coal that the plant can burn in the future, by investing in further emissions-reduction equipment that will allow it to use international coals while maintaining the capability to burn locally-sourced Welsh supplies.

All three units at Aberthaw are contracted under the capacity market until 2020, meaning that RWE will receive payment to keep the plant available to the grid when supplies are tightest during the winter. The utility would face severe penalties if the capacity is unavailable when called upon or if the capacity was closed before the delivery year specified in its contract.

The UK's coal-fired plant capacity has rapidly diminished in recent months after the 2.4GW Longannet and 2GW Eggborough facilities, as well as the final 490MW unit at the Ferrybridge plant, closed at the end of last month. French utility Engie's 1GW Rugeley plant is due to close by the end of June.