The loss of free-of-charge European Union carbon permits next year will make an unspecified number of Centrica Plc (CNA)’s U.K. natural gas power stations unprofitable, according to the utility.
“In power generation, conditions remain difficult for our gas-fired power stations, and will worsen following the loss of carbon allowances from 2013, which in the current market conditions will render much of the U.K. gas-fired generation fleet unprofitable,” Centrica said today in a statement distributed by Business Wire.
The EU will from 2013 stop granting carbon to most power utilities, which have enjoyed mostly free-of-charge permits since the program started in 2005. The bloc will instead sell the allowances.
The average profit achievable by British gas-fired power stations in the past year was 2.74 pounds ($4.25) a megawatt hour, 48 percent less than the year-earlier period, according to a so-called front-month spark-spread calculator that uses market prices for gas, power and carbon.
“We have now taken the decision to close our Kings Lynn power station, with the future of our Peterborough and Roosecote plants under review,” Centrica said. Kings Lynn has a capacity of 325 megawatts, Peterborough 360 megawatts and Roosecote 229 megawatts, according to data compiled by Bloomberg.
Centrica is the biggest supplier of gas and electricity to U.K. households.
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