Centrica to seek bids for £400m plant

CONSTRUCTION of Britain's largest power station in nearly a decade is a step closer after British gas giant Centrica signalled it wants to draw up a shortlist to build a new £400m plant in Devon.

Centrica has announced an invitation to tender for a new 1010-megawatt gas-fired power station at Langage, near Plymouth, a site for which it was granted planning consent last year.

Favourites to make the shortlist are the big international heavy engineers Alstom of France, Mitsubishi of Japan and Siemens of Germany.

The last large generating plant to be built in Britain was an 860-megawatt gas-fired plant at Spalding in Lincolnshire, built by the Intergen joint venture of BP and US construction group Bechtel. Centrica has already contracted to take the electricity from it for years to come.

Langage is only one of three currently consented power station projects, though the German giant E.On, owner of Powergen, has submitted plans for what would be the largest gas-fired station in Europe, a 2400-megawatt plant that it wants to build adjacent to the new liquefied natural gas terminal at the Isle of Grain in the Thames estuary.

Though Langage could not be completed before 2009, Centrica is keen to build new power plant because it wants to generate its own energy for the majority of its 6m residential customers.

The 3700 megawatts of capacity it owns or is contracted to take accounts for 55% of its customers' needs. The company's target is 75%, which Langage will go some way to achieving.

However, volatile power prices has seen Centrica pull back from giving an unequivocal green light to Langage.

Centrica director Jake Ulrich said: "We now need to gain a full understanding of the economics, including construction costs, before we are able to make a firm decision about future development at Langage.'

One major issue is lack of visibility over future 'spark spreads', the difference between forward gas and electricity prices which effectively indicate the profit margin that a gas-fired, electricity-producing power station can make.

In addition, Langage would need the construction of a new gas pipeline by National Grid Transco as the current national gas distribution network ends 40 miles short at Exeter.

Though locals have welcomed the prospect of new jobs and being connected to the national gas network, Plymouth and South Hams councillors have raised objections to the Langage project, demanding a fuller inquiry into the plans by the Environment Agency.