Coal-fired power generation makes a comeback as gas prices soar

London (Platts)--16Jan2006

European coal-fired power generation made a comeback in 2005 as spiraling
oil and gas prices and technological improvements make the solid fuel 
increasingly attractive, according to the latest power plant tracker published
in Platts' Power in Europe Monday. It may be early days, but European
utilities are clearly looking at a new generation of clean coal power stations
to keep portfolios diversified. Nevertheless, gas remains a popular choice.
     In Germany RWE has started building the Eur2.2-bil ($2.7-bil), 2.2GW 
Neurath power plant in a big vote of faith in coal technology, and Germany's 
generous carbon allowance transferral rule. Rival generator Eon has also 
committed itself, with its 1,100MW Datteln project at a cost of Eur1.2-bil. 
Completion of Neurath is scheduled for 2009, Datteln for 2011.
     On Dec 23 Italy's Enel announced a firm decision to proceed with the
Eur1.5-bil conversion from oil to coal of its 2,640MW Porto Tolle power
station in the Veneto region, northeast Italy, "moving closer to its goal of
breaking away from oil dependence in 2010," the company said. Enel said it had
agreed the conversion project with the Veneto regional government. Work would
start in the summer of 2006 if local authorities approve the project in the 
spring. The works are expected to be complete by 2011. Under the conversion 
plan, Porto Tolle's capacity will be cut to 1,980MW. The entire station would 
be closed by 2030. The Porto Tolle conversion is Enel's second major oil-
to-coal project. The conversion of Torrevaldaliga Nord, Civitavecchia, is 
underway, with the first of three 660MW units due on line in 2007. Babcock- 
Hitachi, Ansaldo Caldaie and Demont were awarded the contract for this first 
Super Critical Pressure Boiler power plant unit.
     In the UK, on Dec 20 Eon UK said that, as well as a 1.2GW gas-fired plant
at Grain in Kent, it was looking into the feasibility of building a 450MW 
clean coal plant with carbon capture and storage. "It's very early days--there
is no site or timeline," a spokeswoman said.
     Platts' power plant tracker notes only three active coal projects under
construction: Endesa's 1,400MW As Pontes coal upgrade, Enel's coal conversion
at its Torrevaldaliga Nord oil fired plant and, most recently RWE's new 2.2GW
Neurath Boa facility. In the pre-construction phase, new coal projects are 
proliferating in Germany. Suez-owned Belgian utility Electrabel is examining 
two sites for 750-800MW coal-fired power stations. The most advanced appears 
to be for a site on the property of Niedersachsen Ports at the port of 
Wilhelmshaven. The other potential site is on property owned by Hydro 
Aluminium in Stade on the river Elbe.
     Also in late 2005, Bremen's SWB, 51% owned by Essent, said it would
decide in 2006 on an 800MW coal unit, to cost Eur700-mil, at an existing site
at Mittelsburen. The unit would be commissioned at the end of 2011 at the
earliest. SWB views coal as "the cheapest option for a base load power plant."
Meanwhile RWE Power has now formally announced plans for a 1,500MW coal 
station at its existing Westfalen power station site, near Hamm, but still 
awaits board approval before proceeding. The two 750MW units are planned for 
commissioning in 2010/2011 at a total investment of Eur1.3-bil. SWB and 
RWE Power's coal plant projects bring planned new coal capacity in Germany to 
7,050MW, not including tentative plans at Stadtwerke Hanover.
     The odd project proposal is springing up outside Germany. Last September
Austrian utility Energie AG said it was considering investing in a new coal
plant on the Danube at Enns, with fuel to be brought by river barge. But
Austria is also investing in gas, with plants planned at Mellach and Timelkam.
     Despite the recent media hysteria over Russian gas supplies, Europe's
love affair with the combined cycle gas turbine is not over. Combined cycle 
gas turbine construction has always been quick, with a greenfield 400MW unit 
able to be built in two years. And gas remains comparatively cheap, 
despite the rise in commodity prices, which has pushed up equipment 
manufacturing costs, most notably for wind turbines but also for anyone using 
tonnes of steel in energy intensive processes. Nevertheless CCGT capital costs
remain compelling, roughly half the price of new clean coal and less than a 
third of new nuclear.
     The cost of natural gas itself has gone up, certainly, and has even
prompted one or two projects in Germany to switch to coal, but CCGT
development still dominates the west European power scene, and spend on gas
for power has if anything accelerated in recent months as capacity margins
dwindle after years of under investment.
     Analysis of Power in Europe's recent tracker history backs this up. In
2004, some 10,900MW of combined cycle gas capacity came online across west
Europe. Last year, the figure reached 12,900MW. According to our latest fourth
quarter 2005 survey, no less than 20,330MW of CCGT plant is presently in
construction across the region.

Platts' European power plant tracker is published quarterly in Power in
Europe. For more information or to request a trial visit
http://www.platts.com/Electric%20Power/Newsletters%20&%20Reports/Power%20in%2
0Europe/

Please visit: www.platts.com

Their coverage of energy matters is extensive!!.