British Gas set to build 600m pounds power station

BRITISH Gas is expected to announce within weeks a 1,200 megawatt gas-fired power station at Avonmouth. Midlands Electricity is also thought to be a partner in the Seabank project, which could cost between pounds 500m and pounds 600m.

The plant, the latest in a series of new gas-fired generating projects, poses a further threat to British Coal, which the Government hopes to privatise by the end of the year. Combined Cycle Gas Turbine plants are cheaper to build and run than coal-fired power stations. They are also much cleaner in terms of the level of polluting emissions.

Seabank would be among the largest Combined Cycle Gas Cycle Turbine plants to be built in the UK. Last week Eastern Electricity announced a pounds 160m investment in a 340 CCGT at Kings Lynn in Norfolk. Midlands Electricity has also said it would invest in a large gas-fired plant on Humberside.

Almost all the 12 regional electricity companies in England and Wales announced plans three or four years ago to invest in gas- fired generation but the rush into gas then subsided. One analyst said that the renewed interest in gas-based generation had arisen because CCGT technology had improved and because gas prices for power generation were lower than previously expected.

British Gas has some interests in combined heat and power systems including the Citigen project at Smithfield in London. Seabank would be its first major foray into Combined Cycle Gas Turbines, which are seen as the key to competition in Britain's electricity generating sector. Faced with mounting competition in its traditional gas supply business, British Gas is seeking alternative means of increasing returns for shareholders.