Barking sweeps past fallen runners in the dash for gas

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The Independent Online
THE Grenadier Guards Band played Moon River by the driveway outside the marquee. Inside, hundreds of diplomats, politicians, bankers and captains of industry mingled over wine and canapes. The speeches were mercifully short. But the highlight of the day was the tour, not, as you might think, of a grand new public gallery, but of a new pounds 661m gas-fired power station in Barking, east London.

The only regret expressed by Ron Southern, chairman of Atco, a Canadian partner in the consortium that built the 1,000MW plant, was that he could not persuade the Queen to open it. "She told me last year she had an engagement and sure enough she wasn't able to do it," said Mr Southern in his Calgarian drawl.

In Her Majesty's stead, the partners - including BICC and three regional electricity companies, London, Eastern and Southern - invited Energy Minister Tim Eggar. His speech was spiced with the occasional reference to less fortunate power projects. While Barking began feeding electricity to the National Grid in July, on time and within budget, some new plants have faced months of costly delays. In many cases, the dash for gas has turned into more of a stumble.

Most of the sector's troubles can be laid at the doorstep of General Electric for a fault in its latest generation of combined-cycle gas turbines. CCGTs are among the cleanest and most efficient electricity generators around. At the front end is a stationary jet engine fuelled by natural gas, at the rear, the exhaust is used to heat water for a steam turbine. The problem with the new 9F and 9FA series CCGTs is that they have a tendency to vibrate. Barking, astutely it now turns out, was equipped with five of the already proven 9E series turbines.

The first victim was Keadby, a 680MW plant on Humberside jointly owned by Norweb and Scottish Hydro-Electric. Its GE turbines began to resonate during tests in January, just before they were to be handed over to their new owner. They had to be removed and flown back to the US for repairs at great expense.

Next came Little Barford, a pounds 250m, 680MW power station in Bedfordshire owned by National Power. Engineers were not happy with the turbines' performance even before GE recalled them. The station is now expected to open early in 1996, a year late.

After similar problems, the 660MW Medway Power plant in Kent, costing pounds 380m, is up and running, although it will not be producing at its full capacity until next autumn, 13 months or more overdue. Other smaller plants have also been affected, although Keadby contractor Trafalgar House this week finally reported commissioning now going ahead.

The troubles, though small compared to Britain's total generating capacity, are having a ripple effect. Operators are losing sales, and contractors are facing negotiated compensation or potential lawsuits. Some estimates put the total cost at more than pounds 200m. Perhaps more significantly, competition in the pool, the daily spot-market for electricity, has been reduced. Capacity in the sector is about 57,900MW, compared with a peak winter demand of 48,000MW. Even so, last winter there were complaints from large industrial electricity users, who buy on the spot market, when prices spiked.

The effect this year is likely to be muffled by the low price of gas. While many generators have signed long-term, take-or-pay contracts with North Sea suppliers, these have usually been matched by equally high, fixed-price agreements with electricity distributors, thus guaranteeing a profit margin. Electricity sold to the pool can be supplied by cheaper gas. But that situation is unlikely to last. A similar set-up in North America four years ago was a boon to utilities, but prices there soon turned as suppliers decided to shut in their wells rather than sell to a glutted market.

Nevertheless, most industry observers are confident that neither the short-term technological problems, nor the threat of higher gas prices in the medium term, will put off the move towards gas-fired generation.

Despite the traditional British link to coal-fired energy, and the enthusiasm of the new private-sector coal mining companies, analysts say gas is likely to take an ever increasing share of the market. Some have forecasted that, from almost nothing in 1990, it will have risen to 30 per cent of the market by 2001.