Overview

Post-privatisation investment in the UK electricity generation industry has been in several distinct phases. Once the final form of the industry settled down in the 1990s the new generating companies invested first in gas-fired generation. Previously, largescale gas generation had not been an option for the CEGB, gas being considered too expensive to use for generating electricity. But for the new generating companies gas-fired stations were the ideal. They were relatively fast to build, capacity could be added in smaller plants of two or three hundred megawatts and it was fairly flexible in the market.

This so-called dash for gas also had a very useful side benefit, as it generally replaced, or was used in preference to, the country s oldest and worst-performing coal-fired stations. The result was seen over the 1990s in the UK s carbon dioxide emissions, which are much lower per megawatt hour when using gas-fired generation than when using coal. The result was a significant reduction in the UK s carbon dioxide emissions a purely incidental reduction that we are still relying on to meet commitments under the Kyoto Protocol, as otherwise emissions have been increasing.

Aside from the gas stations, the tendency for the new post-privatisation companies was to sweat existing assets: operate them at peak load and maintain and refurbish them not just to achieve their expected lifetime and output but to surpass it. It meant a huge improvement in the system s efficiency, but it also meant that the UK system had a comfortable excess...