Gas-fired power still looks a safe bet for Centrica in the renewables era
The eye-catching non-Hormuz news in energy-land last month was that Great Britain is set for a record-breaking summer for wind and solar power generation.The national energy system operator even thought there could be periods – a sunny weekend or a bank holiday afternoon of low demand, for example – when more renewable power would be available than the electricity grid needed.So, on the face of it, it is an odd moment for Centrica, the owner of British Gas, to fork out £370m to buy a 16-year-old combined-cycle gas turbine plant in south Wales.After all, the government’s clean power plan imagines that, come 2030, Great Britain’s entire fleet of gas plants will be used to generate only 5% of its electricity, down from 31.5% in 2025.
In reality, the purchase of the 850MW Severn plant near Newport makes strong sense.First, the pure financials stack up: Centrica said it expects top-line annual earnings of £30m-£60m from the facility from next year, implying an earnings yield of more than 10% in the middle of the range.Second, it’s not as if gas-fired power stations earn nothing when they are standing idle.Most get paid just to be available to generate via “capacity market payments”.Severn’s fees from that source are expected to be £35m a year until 2030.
It is unclear, under the government’s plans, how gas plants will be incentivised to stay on the system after 2030 but, since intermittent renewables will need to be supported by a power source that can be turned on at short notice, some form of financial carrot will have to materialise to ensure a core of gas plants survive until more nuclear capacity arrives.Third, there will probably be value in being among the survivors.Severn, built in 2010, may not sound modern but, relative to other plants in Great Britain’s fleet, it is.It may have another decade of life without refurbishment – and refurbishment, note, has become more expensive for older plants now that waiting times for new turbines run into years.And, if the predicted datacentre boom in south Wales materialises, the plant is in the right place.
So it is hard to quibble with Centrica chief executive Chris O’Shea’s explanation: “With the delivery of replacement capacity being impacted by grid access, rising costs and supply chain constraints, alongside the closure of ageing gas assets towards the end of the decade, the need for assets like Severn will increase,”This is the part of the energy transition that gets less attention amid the rollout of solar, wind and battery storage,There is still a need for gas-powered generation to keep the lights on when, for example, it’s a still day in the dead of winter,Gas plants, according to the grand plan, may only produce 5% of Great Britain’s electricity over the course of a whole year but their periods of generation will be concentrated and unpredictable, which probably implies a price premium,For Centrica, the purchase is another step towards becoming an infrastructure-style business with regulated, semi-regulated and contracted revenues.
Last year’s purchase of a 15% stake in Sizewell C power station for £1.3bn – on juicy-looking terms – was in the same style; so, too, the acquisition of the Isle of Grain gas import terminal.On cue, a warning that operating profits from the retail businesses – mainly British Gas – will be “at the lower end of guidance” this year, which knocked the shares down 5%, reinforced the logic of the strategy.An unglamorous gas plant looks more predictable.
May elections: Badenoch rows back on Reform pacts as millions cast their votes – as it happened
Yesterday Kemi Badenoch gave an interview to Sky News suggesting she would be happy to see Conservative councillors working with Reform UK councillors to deliver rightwing policies.In an interview with the Sun published today, Badenoch rowed back on this. She said there would not be any deals because Reform councillors weren’t “serious”. She told the paper:double quotation markWe’re not doing deals with Reform. I don’t want to see us helping Reform
Starmer’s failure to demonstrate strong values ‘driving away progressive voters’
Progressive voters have been driven away from Labour by a lack of argument and vision from Keir Starmer, according to a report using research from a senior pollster to Tony Blair and Bill Clinton.Downing Street is understood to have been briefed on the research, which has also been handed to allies of the potential leadership candidates Andy Burnham, Wes Streeting and Angela Rayner.Labour is braced for dismal results in Thursday’s elections, which could result in Starmer facing a leadership challenge.The report from UCL’s Policy Lab, using research from the eminent pollster Stan Greenberg, suggested voters felt that Starmer had a “discomfort” with progressive values. Key fights that the government could pick included a more robust challenge to Donald Trump and a more passionate defence of environmentalism
Election results timeline: when do key battlegrounds in England, Scotland and Wales report?
Labour is braced for a brutal set of local, Scottish and Welsh election results that will define either the next phase of Keir Starmer’s prime ministership or bring about the end of it. Party strategists expect losses of close to 2,000 seats across England, Wales and Scotland but the damage could be a lot worse. The danger for the prime minister is not whether Labour loses heavily but where those losses come from and who those voters turn to.Across England, Reform UK is hoping to turn public anger over immigration, living standards and distrust of Westminster into local power. In progressive cities, the Greens believe voters are ready to punish Labour from the left, while in parts of Blackburn, Birmingham and east London the independents are continuing to capitalise on anger over Gaza
Major test for Labour as polls open in English, Scottish and Welsh elections
Polling has opened across England, Scotland and Wales in a series of local, mayoral and parliamentary contests – the biggest electoral test Keir Starmer and the Labour government have faced since the 2024 general election.As millions of people across Great Britain go to the polls on Thursday, party leaders are poised for a set of results that could fundamentally change the political landscape nationally in Scotland and Wales, and across local authorities in England.The results will be closely watched by all parties, and are seen as the first major political test of an increasingly multiparty system. They come after months of Labour and the Conservatives languishing in the polls, and the growing popularity of smaller parties such as Reform UK, the Greens and the Liberal Democrats.The elections cover the Scottish and Welsh parliaments and 136 local councils in England, where 5,014 seats are being contested, including every one on all of London’s 32 borough councils, more than a dozen borough councils, six unitary councils, six county councils and three district councils
Keir Starmer makes late pitch to voters turning to Greens and Reform
Labour is braced for record-breaking losses in Thursday’s local elections in England, which could be decisive for Keir Starmer’s future as prime minister.In a message to voters on Thursday, Starmer said Reform’s Nigel Farage and the Greens’ Zack Polanski were “not fit to meet this moment of great global instability” and that only Labour was putting the national interest first.“Today when you put your vote in the ballot box, you face a clear choice,” he said. “Progress and a better future for the community you call home, with a Labour council working with a Labour government. Versus the anger and division offered up by Reform or empty promises from the Greens
Cameo, speeches, pushing gold bullion: how Farage has made millions since becoming an MP
“There’s no money in politics,” Nigel Farage complained almost a decade ago, describing himself as “53, separated and skint”.He has since proved himself wrong. In less than two years in parliament, Farage has brought in £2m, including hospitality, through speeches, presenting, writing news articles, promoting gold bullion – and even recording modestly priced Cameo clips for his fans. It seems that every £70 video counts when it comes to making cash.This is on top of his annual salary as MP for Clacton of almost £100,000, and forthcoming pension from the European Union of about £73,000 a year, which he will be able to claim next year when he is 63
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From ‘whiff-whaff’ to the Table Tennis World Championships – photo essay