Centrica Selling Three Gas-Fired Plants

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) - One of the U.K.'s leading gas and energy companies, Centrica plc (OTC:CPYYY) (Windsor, England), is aiming to sell off most of its gas-fired power plants due to weak power demand and increased competition from coal-fired plants and renewables.

The company will sell its Langage, Humber and Killingholme combined cycle gas turbine (CCGT) plants which have a combined generating capacity of 2,700-megawatts (MW). It's hoping the sale will raise around £500 million ($839 million).

The company owns eight gas-fired plants in total but has been whittling them down in recent times. With the proposed sale, the company's CCGT generating capacity will fall to 650 MW, down from over 4,000 MW of capacity just two years ago. The remaining Brigg, Roosecote and Peterborough plants have been configured to run more flexibly and operate in the government's Short Term Operating Reserve (STOR) market, in an effort to cut their operating costs and provide a guaranteed income. In March 2012, Centrica announced the closure of the Barry plant in Sully, located in the in the Vale of Glamorgan, and King's Lynn in Saddlebow in Norfolk. For additional information, see March 12, 2012, article - Centrica to Shut Two Gas-Fired Plants in U.K..

"With Centrica having successfully adapted its smaller assets to serve as flexible "peaking" plants, it will now focus on this part of the market for gas-fired generation, with flexible plants working alongside baseload nuclear output, variable output from our wind portfolio and peaks in downstream market demand," the company stated. "In this context, the review highlighted investment opportunities to upgrade and develop a number of the smaller plants. Under draft rules, the plants could qualify for capacity market agreements, if they were to participate in the capacity auction due to take place at the end of this year. In addition, to address the continuing operating losses from the fleet, Centrica will seek to release capital from the three larger operating plants. Subject to the receipt of acceptable offers, a portion of the funds from the disposal may be recycled back into upgrading the smaller remaining plant. Centrica expects the larger plants to continue to operate under new ownership."

Early last year, Centrica abandoned plans to build new nuclear plants in the U.K. with French partner, Electricite de France S.A. (EPA:EDF) (EDF) (Paris, France), blaming concerns over costs and project delays. The company had the option to own a 20% stake in four reactors. For additional information, see February 8, 2013, article - Centrica Abandons U.K. Nuclear Projects.

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