Profitability of combined-cycle gas power plant is dire in Belgium - with spill-over effects to Luxemburg. French ENGIE decided to close the 385 MW Twinerg CCGT, which mostly caters to the Belgian market, by October 2016. This move follows just weeks after EDF Luminus said it intends to close for of its gas power assets.
Over the past winter, Twinerg was part of Belgium’s strategic capacity reserves – getting payments for maintaining the ability to start up at short notice, if required by the grid operator.
Gas peaker ‘unprofitable’ outside balancing market
Now, ENGIE is struggling to keep the gas peaker plant profitable over the summer and no guarantee has been given for it to be dispatched yet again into Belgium’s balancing market over the autumn and winter season.
A spokesman of the French utility said the uncertain economic and legal situations regarding power generation capacity would make it untenable to keep the plant operational, so it will be “shut and dismantled”.
Asset to be dismantled after no buyer was found
Efforts to sell off the Twinerg power plant over the past month proved unsuccessful, so ENGIE and its partners decided to shut down the unprofitable asset. The French utility owns 65% of the plant, while Enovos and Arcelar Mittal each have a 17.5% stake.
Use of gas for power generation has been in steady decline in Belgium since 2010 – just interrupted by the need for more fossil capacity amid a temporary shutdown of four of Belgium's seven nuclear power plants in 2015.
Profitability of gas peaking plants has increased slightly over competing coal-fired plants amid a fall in fuel prices for natural gas – yet this is not sufficient to convince operators to keep struggling, or loss-making, plants operational for much longer.
EDF Luminus threatens to close four Belgium CCGTs
In late June, EDF Luminus – one of ENGIE’s rival utilities – has announced the permanent closure of four of its gas power plants in Belgium, citing an “extremely unfavourable economic context”. Run-time hours of these plants had decreased to a point that rendered operation uneconomic – use of coal power to balance renewables tends to be cheaper in several EU countries, including Belgium, it said.
Consequently, the board of EDF Luminus informed Belgian authorities of a “possible permanent shutdown before 31 July [this year].” The actual closure is planned for 31 October 2017, and concerns the following plants:
- the combined-cycle power plant at Seraing, near Liège (485 MW),
- the 31-32 open-cycle power plant at Angleur, near Liège (50 MW)
- the combined-cycle power plant at Ghent (Ham) (52 MW),
- the open-cycle power plant of Izegem in West Flanders (22 MW)
Yet, EDF Luminus might just try to build pressure on Belgian policy makers to introduce a capacity market. The utility stated that between now and October 2017, it will “monitor the ongoing talks about capacity remuneration mechanisms for the thermal power stations.