French thermal generation capacity closures gather pace

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16 April 2013, Oil, Gas

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In 2011 E.ON France announced that it intended to close at least five coal-generation plants in 2013 due to narrow dark spreads, the reduction of free CO2 allowances from January 2013, and the EU Large Plant Combustion Directive, which also caused the closure of RWE's Didicot A plant (2GW) in the UK in March 2013.

E.ON's Hornaing site (210MW, Nord) stopped production in the same month, and will be progressively dismantled over the next three years after E.ON decided against converting it to CCGT, but further closures will be delayed due to union pressure. Lucy (245MW, Saone-et-Loire) will close down at the end of March 2014, while the Emile-Huchet plants 4 and 5 [445MW]) will close some time in 2015. The exception is the Provence 4 (230MW), which will be converted to biomass and thus be eligible for government subsidies. Datamonitor's feed-in-tariff database shows biomass generation in France is eligible for support of 4.34 euro cents/kWh.

GDF Suez is following a similar trend by reducing its gas generation portfolio. It intends to mothball three gas plants in France from May 2013, with a combined capacity of 1.36GW. Its Cycofos plant (Marseille) will be mothballed for four years, and generation has already stopped at its Combigolfe (Fos-sur-Mer) plant for the extended 2013 summer. Similarly, its Spem (Montoir-de-Bretagne) plant will operate only in the winter.

Further afield, GDF Suez also intends to close five gas generation sites in the Netherlands and Hungary with a total of 2.1GW of capacity, and possibly a site in Spain. These moves tie in with GDF Suez's long-term strategy to cease gas generation capacity in Europe. It closed 10 sites across Europe over 2009-12, leaving some 53GW of thermal capacity across Europe as of mid-2012. In the meantime, GDF Suez is reinforcing its position as the leader in onshore wind development in France. It currently has some 1,200MW of onshore wind generation, and has just opened a new 8MW Hambers onshore wind farm in the Mayenne region.

Without incentives to keep gas plants open, mothballing will continue. Coal plants will also close progressively, and subsidized generation will continue to grow - leaving the delicate question of which incentives to choose to ensure enough gas is available to keep the lights on. / / @DatamonitorEN

Source: MarketLine

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