Centrica announced at the tail end of last week the planned build of a new 885MW CCGT plant in Langage, Devon. The £400m project, to be built and maintained by French Alstom, could come online as early as 2008/09 and will supply up to 1 million homes. Centrica had postponed the planned plant citing poor spark spreads as making the build uneconomical.

However, Centrica now believe that NBP gas prices will ease in the coming years versus power prices making the spark spread more attractive, and they have also cited the DTI’s and Defra positive stance regards new build by not penalising them in terms of allowances (the UK have confirmed they will take into account new build when allocating allowances under the second National Allocation Plan).

The bonus value in Langage lies in its location though. The plant will benefit from Use of System payments where National Grid will pay it to connect to the system. Had the plant been operational in 2004 for example, it would have benefited from £5.5m in payments. (In contrast, those stations in the north where supply exceeds demand, have to pay Grid to connect to the system).