Continued growth in the demand for power means the UK needs long-term investment in new generating capacity. Around 19 gigawatts (GW) of generating plant will close by 2020, including older nuclear plants and coal-fired power stations that have 'opted out' of the provisions of the European Union (EU) Large Combustion Plant Directive. This includes the existing coal-fired units at Kingsnorth and Ironbridge, and our oil-fired plant at Grain, which, under the Large Combustion Plant Directive legislation, will be limited to 20,000 hours operation from 2008 and must close by the end of 2015 at the latest. This capacity will need to be replaced by lower carbon alternatives.

Projected UK Power Supply and Demand

But these will take time to develop, as technologies will need to be proved, and planning and regulatory restrictions eased. It will be important to develop an investment climate that encourages this change.

Combined cycle gas turbine (CCGT) power stations are more efficient and emit less carbon dioxide (CO₂) than conventional coal-fired power stations. In the short term, investment in CCGTs is a relatively low-carbon way of increasing capacity and we have received approval from the DTI for a 1200MW CCGT to be built on the same site as our existing oil fired station on the Isle of Grain in Kent, due for completion in 2009. We are seeking approval for another gas fired plant at our site in Drakelow, Derbyshire.

Coal is a major source of CO₂ emissions, but remains vital to the diversity and security of energy supplies. There is growing interest in developing more efficient and 'cleaner' generation systems using carbon capture and storage techniques, which will give coal a new lease of life as an energy source. We are looking at a number of options, including a feasibility study into building a 450MW Integrated Gasification Combined Cycle (IGCC) coal-fired power station with carbon capture and storage in Lincolnshire. IGCC technology involves gasifying coal to release CO₂, which can be captured and stored, and hydrogen for generating electricity using highly efficient gas turbines.

We are also planning two new state-of-the-art 800MW supercritical coal-fired units at our existing Kingsnorth site in Kent. The new units will be capable of generating enough electricity for 1.5 million homes and will be considerably more efficient than the existing one, emitting up to 20% less CO₂ per unit of electricity generated by a conventional plant. In addition, the new station will be made 'carbon capture ready' so when the technology to capture and store the carbon dioxide produced is ready, it can be easily fitted to the station.

Generating electricity also produces a great deal of waste heat. In conventional plants this heat is lost to the atmosphere. We already operate a number of small and medium-scale Combined Heat and Power plants, which are designed specifically to capture and use the excess heat for industrial processes or heating. For our next generation of power stations, we are looking at ways to capture and supply the waste heat from larger plants, which could achieve even greater efficiencies.