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RWE joins UK coal retreat with reduced Aberthaw operations

(Adds detail, background)

LONDON, April 25 (Reuters) - RWE (LSE: 0FUZ.L - news) npower will reduce operating hours at its 1,600 megawatt Aberthaw coal-fired power plant in Wales from April 1 next year, it said on Monday, as the British power sector eyes government plans for all coal plants to shut by 2025.

RWE npower said it would discard its current production model to focus on generating electricity only when needed.

"We must ... recognise that the current market for energy generation remains extremely challenging and demand for coal generation over the coming years is expected to be low compared with recent times," the company said in a statement.

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The British government's announcement in November that it wants to close all coal-fired plants by the middle of next decade and two power companies have since said they will shut down plants.

SSE (LSE: SSE.L - news) has said it will shut most units at its Fiddler's Ferry plant, though it has since extended operations by a year. Engie (LSE: 0LD0.L - news) in February announced the closure of its Rugeley station this summer.

Coal plants are struggling to compete with cheaper gas generation and renewable energy such as wind and solar. Operators of high-polluting plants, such as coal stations, also pay a hefty extra tax on carbon emissions.

A spokeswoman for RWE npower said its move at Aberthaw will result in job losses but that details have not been finalised.

The company has also decided to adapt technology at the station to allow it to burn a wider range of coal, which will lower emissions of nitrogen oxide by 30 percent.

Aberthaw has won contracts in Britain's capacity market auctions to remain on standby in the winters of 2018/19 and 2019/20. (Reporting by Karolin Schaps; Editing by Susan Thomas and David Goodman)