U.K. Left With Just Four Coal Power Plants After RWE Announces Closure

(Bloomberg) -- The U.K. will soon be down to four coal-fired power plants after RWE AG announced plans to close a major facility in southern Wales next year.

The German utility will cease work by the end of March at the Aberthaw power station. The unit was opened in 1971 and has the capacity to generate 1,560 megawatts of electricity, enough for more than 1.5 million homes.

The move marks another step to reach the government’s goal of eliminating coal as a fuel for power generation by 2025. The Conservative administration as well as the major opposition parties have backed measures to reduce net fossil fuel emissions to zero by the middle of the century.

Heavy costs imposed on releasing pollution helped speed up the decision to close the plant in Wales. Britain participates in the European Union emissions cap-and-trade system and will maintain levies on polluters after exiting the group. Those tariffs have encouraged generators to use more wind and solar power at the expense of coal.

“Market conditions made this decision necessary,” Roger Miesen, chief executive officer of RWE Generation said in a statement.

Britain fueled its industrial revolution with coal starting in the mid-1800s. In more recent years, it’s encouraged cleaner forms of energy, especially wind and nuclear reactors, as an alternative.

Coal plants failed to win contracts to sell their electricity in the U.K. capacity market auction in June, which that cleared at a record-low price of 77 pence per kilowatt-hour a year, according to data from National Grid Plc.

RWE’s decision follows SSE Plc, which said earlier this year that it would close its only remaining coal power plant next year as well because it wasn’t profitable anymore. Electricite de France SA is shutting its Cottam plant in September.

The Aberthaw Power Station will transfer its existing capacity market agreements for the years 2019/2020 and 2020/2021 to third parties and a small proportion to other units in RWE’s fleet, according to a statement from the company on Thursday. The facility directly employs about 170 people.

Closing that plant will leave one coal power plant operating in Northern Ireland and two smaller ones in Britain, at West Burton and Ratcliffe. Another two coal generation units owned by Drax Group Plc will be converted to gas in the next two years.

©2019 Bloomberg L.P.