UK coal plants to shut early on carbon tax

British utilities may close coal fired power plants earlier than previously planned after the country set a minimum price for carbon emissions, according to Matrix Group analysts.
Four plants including E.ON's Kingsnorth plant, RWE's Tilbury and Didcot power stations and Iberdrola's Cockenzie facility may close by 2013 rather than 2015, Matrix analyst Adam Forsyth said in a note, reported Bloomberg.
Britain has about 11.4 GW of fossil fueled power stations due to close under European environmental legislation by the end of 2015. The plants must shut after using the 20 000 additional operating hours they were allocated.
Early plant closures, coupled with higher gas and electricity prices, could boost power plants’ profit margins known as dark spreads for coal generation and spark spreads for gas production.
“We expect spark and dark spreads to widen after 2013 and again after 2015 due to closures,” Forsyth said.
The UK announced a Carbon Price Support in its annual budget last week. The floor price will be GBP16 per tonne of CO2, rising to GBP30 by 2020. Documents released on March 23 showed the Treasury will charge utilities a tax of GPB4.94 a tonne in 2013.

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