The high cost of natural gas is forcing
electricity generators to burn more coal in an attempt to keep a lid on
power prices. A doubling of the price of summer gas over the past two
years has encouraged generators to switch back to cheaper coal, but the
cost savings come at an environmental price.
Powergen, Britain’s second-biggest generator,
said that it was using 20 per cent more coal than last summer, taking
advantage of the widening gap between the costs of the two fuels. Last
week the company gave in to the cost pressure of rising wholesale fuel
prices, introducing steep increases in gas and electricity tariffs for
its residential customers.
John Ridley, an energy trader for Powergen,
said the company was using more coal than expected. “Coal is the main
generating source in the winter months, but in the summer gas normally
runs ahead of coal,” he said. “In the summer of 2003, gas was 16p per
therm, but this year it’s 30p per therm. You think long and hard about
using gas generators.”
Figures from the Department of Trade and Industry, show a
significant shift away from gas in the winter months. In the first
quarter of 2005, major power producers burned 4.2 per cent more coal
than in the same period in 2004. Over the same period, when overall
fuel consumption remained static, there was an 8 per cent decline in
gas consumption.
