Centrica to develop UK's first major power station for five years

Centrica plc today announced it is investing £400 million to develop the first major power station to start construction in the UK for nearly five years. Commercial operations at the 885MW gas fired plant in Langage, Devon, are due to start during winter 2008/2009, providing an additional source of power for the UK and enabling Centrica to further optimise the cost of supplying electricity to its British Gas customers.

Langage, which will be one of the UK’s most efficient power stations, will be capable of supplying the equivalent annual power needs of over one million homes and could meet around 11 per cent of Centrica’s forecast peak residential electricity demand. The station, which is one of only a limited number of large scale power station projects in the UK with planning consent, is scheduled to come online as the UK’s generation reserve margin continues to decrease over the coming years.

Centrica has awarded Alstom a fixed price engineering, procurement and construction (EPC) contract to develop the combined cycle gas turbine plant. Inclusive of the original acquisition cost, associated costs to develop a gas pipeline connection to the National Transmission System and current development costs, the total capital investment would be approximately £400 million. Alstom will also provide maintenance support to Langage for an initial 12 year period under a long term service agreement.

Centrica owns the largest fleet of combined cycle gas turbine (CCGT) power stations in the UK. Once Langage is operational, together with its existing gas and renewable power generation assets, its Drax supply contract and the Spalding tolling agreement, Centrica will be able to supply around 71 per cent of its forecast peak British Gas electricity customer demand from its own sources.

Sir Roy Gardner, Chief Executive of Centrica, said: “Faced with a volatile wholesale energy market and a predicted reduction of power generation sources in the UK over the coming years, this major investment signals Centrica’s commitment to secure the future energy needs for our British Gas customers.”

“British Gas is a leading household electricity supplier and we will continue to seek opportunities to increase our level of power generation, major contracts and tolling agreements in order to continue to offer competitive prices to our customers.”

Malcolm Wicks, Energy Minister, said: "This is a welcome move by Centrica which is investing to secure the future energy needs of UK consumers. Langage will contribute towards the UK's security of supply as new and more efficient power stations are needed in the coming years to replace existing plant."

Langage’s location in the south-west, which has little existing power generation capacity, means Centrica will benefit by receiving Transmission Network Use of System (TNUoS) payments. Centrica’s investment has also helped to underpin National Grid’s reinforcement to the gas and power networks in the region.