Future of Power Plants

The UK’s power industry is changing drastically, with limitations and plans afoot throughout to change the effect of the industry it is important to realise what these limitations and changes will do. This article aims to look at the current state of affairs within the industry and what the future holds for it as well.

The main point of interest to any involved in the power plant industry is the government plans to phase out the use of coal powered plants by 2025. In 2016 we have seen 3 plants (Longannet, Ferrybridge C and Rugeley) all close, with some other sites planning a partial or complete closure in the near future. Reasons for the closures have generally pointed to the fall in market prices and the increase in carbon costs, more than likely as a result of the EU Large Combustion Plants Directive, where the limitations on emission limits have caused some huge changes, such as Ironbridge station converting to Biofuels before its closure last year.

The low gas prices have also had an effect on coal powered stations, which results in a marginal cost lower than coal's production costs. At a time of surplus plant capacity they are too expensive to compete in the wholesale market and so need to close. Although wind and solar power are more expensive, their guaranteed prices mean they don't have to compete in the wholesale market making its share of the market smaller and so the marginal price is therefore lower.

Ironbridge Power Station

The real question is what does the future hold for UK based power plants?

This year, Hinkley Point’s proposed nuclear site has become the biggest hot topic, generating some controversy over the terms of the site’s construction as well as the use of Nuclear Energy. The cost of the site (though to be covered by EDF and others) has also caused concern, as has the proposed set price from the government for the amount of electricity generated by the plant.

The development of Hinkley Point is seen by many as a requirement to make up for those stations currently closed or in the process of. It is suggested that Hinkley Point alone would account for approx. 7% of the UK electricity levels, and the aim of the site would be to deliver the base load electricity on a constant basis, something that is often not fully achievable via other energy sources.

Artists Impression of Site C at Hinkley Point. Copyright - PA

The negatives surrounding the station are of concerns towards the set price from the government for Hinckley’s generated electricity, with current suggested figures around £90 per MWh for a 35 year period. In addition to this concern, there are also some wariness surrounding the new designs proposed for the station, as original versions of these currently being built in France have gone over-budget and over-time. The discussions will no doubt continue for a long time until any decision is made by the government as to the approval of the project.

For further information on the Hinkley C development, there are currently many news stories on it throughout the national media; however this BBC story is a good starting point.

Whilst Hinkley Point’s station remains in the balance of construction, the need for alternative methods of power plants also remain under some concern.

Gas powered plants are another option that could be used, although concerns over the costings and the controversy over Fracking methods mean that many involved in this part of the industry are understandably tentative for any new builds in this regard.

The popular vote lies within renewable clean energies, and perhaps the biggest help to this will be the on-going development of energy storage. With the decreasing costs in technologies and more companies getting involved in such a system it could mean that renewable energy levels could increase beyond the 25% provided to the UK in 2015. However these steps are still to be taken, even with developments from Statoil to see if their offshore wind farm battery system will be able to work in the long-term. If such companies are able to make such battery systems work then the likelihood of a bigger push into renewable energy is more probable than ever, as it would remove some of the major concerns surrounding renewables.

Proposed Offshore Wind Farm Battery System Concept. Copyright - Statoil

Demand side load management is another big issue for the energy industry, and involves the use of all embedded standby generation that is currently available being used in the correct fashion. In the past buildings such as hospitals spent the capital on standby generators however rarely used them, but through side load management they are now able to recoup some of that original cost. The economics of this is very beneficial to all and improves the security of the supply, as less due to the generation being close to the demand there is less risk to the transmission and distribution systems. A more reliable and cost-effective system has a great level of benefits to all.

The next few years will be an important period for the UK power plant industry, as decisions on Hinkley Point is likely to affect the entire industry one way or the other. An approval will cause a push in the Nuclear sector, whereas a rejection to the proposal will more than likely cause a scramble in Gas or Renewables.

Either way we will hopefully see a positive increase in the developments of Power Plants across the UK, as the continuing closure or reduction of the existing plants certainly does not bode well for the industry. For further information on the current UK energy climate, have a look at Ofgem’s wholesale market review.

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