Centrica to develop £400m power station

The first major power station development in the UK for nearly five years received the go-ahead yesterday from the British Gas owner, Centrica.

Britain's biggest gas and electricity supplier is spending £400m on building the gas-fired station at Langage, near Plymouth, which will supply one million homes. The 885-megawatt station, proposed eight years ago, is set to start operating in the winter of 2008-09 and will meet 11 per cent of Centrica's peak residential electricity demand.

The company hopes the plant will reduce its exposure to volatile wholesale energy markets which have driven customer bills to record highs. It blamed a fresh surge in wholesale energy costs for its 22 per cent rise in gas and electricity prices at the start of March, Centrica's fourth increase since January 2004.

Centrica awarded the contract to develop the combined cycle gas turbine (CCGT) plant to the French engineering group, Alstom. Centrica owns the largest fleet of CCGT plants in the UK. Once Langage is operational, Centrica will supply about 71 per cent of its expected peak demand from its own sources.

Sir Roy Gardner, Centrica's chief executive, said: "Faced with a volatile wholesale energy market and a predicted reduction of power generation sources in the UK over the coming years, this major investment signals Centrica's commitment to secure the future energy needs for our British Gas customers."

He said the group would look for other deals to boost reserves. It is in talks with Gazprom about getting access to the Russian gas giant's huge energy resources.