U.K. energy policy U-turn

April 19, 1999
A U-turn in U.K. energy policy sparked an entertaining claim by opposition politicians that the government is using regional investment to win votes. The fuss surrounds the U.K. Department of Trade and Industry (DTI) decision that it "will not raise energy policy objections" to a proposal by Baglan Cogeneration Co. to build a gas-fired power station. Baglan Cogeneration is a joint venture of BP Amoco plc and General Electric, and it plans to build a 500-MW plant on a petrochemicals site at
David Knott
London
[email protected]
A U-turn in U.K. energy policy sparked an entertaining claim by opposition politicians that the government is using regional investment to win votes.

The fuss surrounds the U.K. Department of Trade and Industry (DTI) decision that it "will not raise energy policy objections" to a proposal by Baglan Cogeneration Co. to build a gas-fired power station.

Baglan Cogeneration is a joint venture of BP Amoco plc and General Electric, and it plans to build a 500-MW plant on a petrochemicals site at Baglan Bay, South Wales, that is being gradually closed by BP Amoco.

DTI's approval is viewed by opposition politicians as a move by government to win support for the local Labour Party ahead of elections for the new Welsh Assembly.

Also, it marks a policy U-turn after the government last year passed legislation intended to curb the building of gas-fired power plants, in a bid to maintain diversity of U.K. power generation fuels (OGJ, Nov. 2, 1998, p. 35).

Criticism

Shadow Industry Secretary John Redwood said it was no coincidence that the news came at the start of the assembly election campaign, part of the U.K.'s move to give Wales and Scotland decision-making power outside London.

Redwood, secure in the knowledge that the Conservative party would never twist policy to win votes, added that the government "clearly believes that a Welsh election is worth a few closed pits in England."

And secure in the knowledge that the Conservatives played absolutely no part in the demise of the U.K. coal industry, Redwood will be cheered by DTI's announcement of a coal supply deal for power generation.

DTI revealed that RJB Mining clinched a 5-year contract worth an estimated £1.3 billion ($2.1 billion) to provide coal to the 4,000-MW Drax power station operated by National Power plc.

Justification

The justification of the U-turn came in a letter to Ken Allison, project manager at Baglan Cogeneration, from Malcolm Keay, director of the DTI's energy policy and analysis unit.

Keay wrote that while the gas-fired power plant scheme had significant benefits in terms of efficiency and cleanliness, these were not enough to justify making an exception to the new gas-fired plant ban.

But Baglan Cogeneration had smartly marketed itself as the center of a planned industrial development, based around the BP Chemicals plant. Companies that relocate to the Baglan Energy Park would be offered power at a price up to 30% lower than retail electricity costs.

In addition, the plant is expected to incorporate a new turbine design, GE's H system. GE is understood to be planning to prove the new turbine there for other potential buyers. DTI sees this as a benefit, too.

The industrial park is expected to create 6,000 new jobs, and the plant, which is said to be 2-3% more efficient than other combined-cycle plants, is being touted as "the core for a new center of technological excellence in Wales."

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