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Ireland's ESB makes Eur177 million impairment on three-year-old UK CCGT


Reduced margins now, lower forecast peak prices

Irish demand recovering after 15% COVID decline

Increased provisions for peak plant closures

  • Author
  • Henry Edwardes-Evans
  • Editor
  • James Leech
  • Commodity
  • Electric Power Natural Gas

London — Ireland's ESB has made a Eur177 million ($210 million) impairment charge on its 884 MW Carrington gas-fired power plant in Manchester, the state utility said Sept. 18 in an interim results statement.

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Energy margins for thermal power stations in the GB market had fallen in the six months to end-June 2020, ESB finance director Pat Fenlon said.

"Increased renewable generation on the system and reduced demand due to COVID-19 has displaced thermal plant and reduced margins," he said.

GB projected thermal margins and captured spreads into the future had also fallen due to reduced demand and lower forecast peak prices, Fenlon said.

"It is in this context that we have made an exceptional impairment charge of Eur177 million on our Carrington gas fired power plant," he said.

The Eur840 million CCGT was officially opened in March, 2017.

The impairment charge represented about 1% of ESB's total asset base.

In the home market, Irish electricity demand fell by about 15% at the height of lockdown restrictions but began recovering in July "and is now back in line with or slightly above 2019 comparative levels," the utility said.

Generation and Trading's operating profit of Eur68 million for the six months was down Eur2 million on year due to lower demand, reduced generation, and an increase in station closure provision for peat-fired power stations.

ESB Networks' operating profit of Eur132 million was down Eur24 million largely due to lower demand.

Subsidiary Northern Ireland Electricity Networks' operating profit of Eur45 million, however, was up Eur13 million due to higher regulated Public Service Obligation income and higher agreed tariffs.

Customer Solutions operating profit of Eur18 million was down Eur23 million following residential tariff decreases of 2.5% (power) and 11.5% (gas) from April 1.

Carrington's fortunes could cast a shadow on ESB plans for new capacity at its Corby site in Northamptonshire.

In August last year ESB called for bids for a new 300-350 MW open cycle gas turbine plant at Corby.

The utility has a 26-year-old 360 MW gas plant at the site, one of the first independently run power stations in the deregulated UK market.

Earlier this year the new project (rated 304 MW) was pulled out of the UK's four year ahead (T-4) Capacity Market auction for delivery 2023-2024.

Over 1.5 GW of new gas-fired generation capacity were awarded contracts in the auction.