InterGen says could start two new UK gas-fired plants by 2018

LONDON, Oct (KOSDAQ: 039200.KQ - news) 28 (Reuters) - Two new gas-fired power plants with a combined capacity of 2.1 gigawatts (GW) could come online by 2018 in Britain, developer InterGen said on Monday.

Britain faces a power capacity crunch within two years' time due to the closure of polluting and ageing stations and a lack of new capacity.

Plans for new thermal power stations have dried up in recent years due to an overhaul of the energy market but government announcements on the creation of a capacity market have reignited interest.

The two plants, Spalding Energy in Lincolnshire which is majority owned by utility Centrica (LSE: CNA.L - news) and Gateway Energy in Essex, together will cost up to 1 billion pounds ($1.62 billion)to build and are equal to around 3 percent of Britain's current installed capacity.

The definitive start-up of the plants will depend on the outcome of a tolling offer which InterGen launched on Monday, asking parties interested in purchasing power from the plants to come forward.

The company declined to give details of the offer including which price it is proposing to sell its power at.

"It would probably be two separate offers at least, depending on how much capacity a potential partner might want," said a spokesman for InterGen.

The company on Monday also signed an exclusivity agreement with Germany's Siemens (TLO: SIE.TI - news) to construct and maintain the two new plants.

Siemens expects building the two stations will create 3,000 jobs during construction. The company will use its H-scale gas turbine technology which typically reaches an efficiency rate above 60 percent.

Britain's Electricity Market Reform package includes a proposal for a capacity market which will financially reward power plants, such as gas-fired stations, to be on standby to produce when additional power is needed.

Older and less efficient gas-fired power plants are being switched off across Europe because high gas prices have made them less profitable to run than plants fuelled by coal.