Thursday, October 08, 2009

Kingsnorth crashes

After all the travails in keeping the Kingsnorth power station project alive, E.ON has abandoned its plans to develop the site, blaming lower electricity demands due to recession.

The two units that were to be built, at 800MW each, were to compensate for the loss of the current 1940MW dual-fired power station, which is being forced to close because of the EU's large combustion plant directive. The decision to walk away from the project, therefore, will leave a huge gap in the Britain's electricity generation capacity.

As we have noted before, though, the gap is being filled by the rapid expansion of gas-fired stations. Not only are these relatively cheap to build, they can be commissioned relatively quickly – within two years of approval.

Another factor, albeit not directly cited, must also have been the looming requirement for carbon capture – supported by all major political parties. Looking at the overall investment requirements for new coal plants, and the uncertainties over future requirements, E.ON could only really come to one decision – to hold off for the time being and then, if need be, to go for a new gas plant.

This does not make power cuts any more likely, but it will increase our dependence on increasingly expensive gas supplies, and our reliance in imported energy sources.

Nevertheless, environmentalists have hailed the decision as a victory against dirty coal. "This development is extremely good news for the climate and in a stroke significantly reduces the chances of an unabated Kingsnorth plant ever being built," said Greenpeace executive director John Sauven.

What makes this episode remarkable though is that, while the best efforts of the EU and the greenies - with the assistance of the Tories' Zac Goldsmith - have failed to scupper the project, it has been done for by the recession. No doubt the EU will take note of this. All it has to do is continue its so far successful attempts to wreck our economy and it will have no difficulty meeting its emission targets.

And there will be plenty of people around who want that to happen.