Energy Bill May Kill New Gas-Fired Power Plants, RWE Warns
German energy giant RWE has warned it will significantly scale back its investment in Britain unless the Government provides “desperately needed” certainty over energy policy. It is “hard to see” RWE investing in more gas plant at the moment, CEO says.
The company, which owns supplier npower, pumped more than £3bn into UK energy infrastructure over the past three years – some 60pc of its European investment and “more than any other energy company”.
In an interview with The Sunday Telegraph, Paul Massara, npower chief executive and RWE’s UK representative, said: “I doubt that we will be investing the kind of money we have been investing unless there are propositions which attract not only us but also enable other capital lenders to come into the market place.
“The UK government needs to understand that capital is a scarce resource.” Ministers say £110bn of investment in new power plants is needed to keep the lights on over the next decade.
But Mr Massara said there was “no way” this would come just from energy utilities and would also require investors such as pension funds. “If you want to get those guys involved you have to provide long-term certainty and clarity of purpose and that’s what’s so desperately needed.”
MPs are scrutinising the Energy Bill, which is intended to encourage investment. A so-called “capacity market” could pay gas-fired plants for availability, while “contracts for difference” will offer guaranteed returns for nuclear and renewable energy sources.
“The Energy Bill is getting us there but there is a huge amount of detail that is still missing, that we need to absolutely understand in order to make those investment decisions,” Mr Massara said, adding the legislation had taken “a long time”.
Much of RWE’s recent UK investment was in two efficient gas-fired power stations at Pembroke and Staythorpe but they “aren’t running a lot of the time” because margins were lower than had been expected. It was “hard to see” RWE investing in more gas plant at the moment, he said.
The company would continue to invest in renewables, he said, with some wind-farm projects to which it is already committed. It was also “likely” to proceed with converting its Tilbury power station from coal to biomass.