Blow to energy security as ‘Czech Sphinx' scales back gas power plant plans

Yahoo

08-02-2025

Britain's blackout prevention system has been dealt a blow after the billionaire known as the 'Czech Sphinx' scaled back plans to build a new gas-fired power station in Yorkshire.
EPH, controlled by Daniel Kretinsky, previously set out plans to spend more than £1bn on redeveloping Eggborough's coal power station by building two combined cycle gas turbine plants there, along with new battery storage.
The gas-fired plants secured government contracts to provide 1.5 gigawatts (GW) of power from 2026 onwards through the capacity market, a backup system meant to keep Britain's lights on. This would be enough to power more than 2m homes.
However, EPH last month terminated one of the contracts, halving the amount of electricity it would guarantee to the grid, according to regulatory filings seen by The Telegraph.
Experts said the withdrawal threatened UK energy security unless the capacity was swiftly replaced, creating a headache for Ed Miliband, the Energy Secretary.
They also warned that Mr Kretinsky's decision to scale back his ambitions was potentially an ominous sign about the viability of other gas plants, given the relatively high payments the Eggborough plants had secured.
Mr Kretinsky's change of plans have come to light weeks after ministers approved his controversial £3.6bn takeover of Royal Mail, marking the first time the postal service has fallen under foreign ownership in its more than 500-year history.
Known in the City for his inscrutable investment style and the rarity of his public statements, Mr Kretinsky is worth $7.5bn (£6bn). He made his fortune through EPH by betting that coal and gas-fired power plants would still be in demand across Europe for longer than most expected, even as other utilities retreated.
His other stakes in British businesses include a holding in groceries giant Sainsbury's, while EPH's energy assets include gas-fired plants at South Humber Bank in North East Lincolnshire and Langage in Devon.
EPH's decision to scale back its capacity market plans follow claims – denied by grid operators – that Britain came 'within a whisker' of blackouts last month when a 'dunkelflaute' period of calm weather rendered the country's wind farms largely inert.
Mr Miliband's plan for a clean power system by 2030 relies on maintaining a fleet of gas power plants that function as last-resort generators, firing up when wind farms cannot provide enough power.
These generators are deployed through what is known as the capacity market and EPH secured contracts at Eggborough to provide power at £63,000 per megawatt starting from 2026 to 2027.
Tom Edwards, of the consultancy Cornwall Insight, said the contracts were some of the highest ever awarded. Under the 15-year deals, generators are paid a retainer on the understanding that they must be ready to switch on at a few hours' notice if the National Energy System Operator (Neso), which manages the grid, orders them to.
Despite having previously issued warning notices to generators, which were later withdrawn, Neso has never resorted to activating the capacity market. However, Mr Edwards said the system remained an essential backstop and said the lost capacity at Eggborough would have to be replaced.
He said: 'We are expecting several [gas plants] to come to the end of their lives before 2030, so there would need to be new capacity to replace them and maintain security of supply.'
Kathryn Porter, an independent analyst at Watt Logic, said the Eggborough withdrawal had come 'at a bad time' and could force grid operators to pay out even bigger sums.
She said: 'The Government wants to place 35GW of gas fired capacity into reserve by the end of the decade.
'The intention is to incentivise this through the capacity market. But the market has failed to deliver on its objectives since the outset and this cancellation indicates the challenges of providing sufficient economic incentive to secure this vital reserve.
'Prices are likely to have to increase to ensure enough gas reserve can be secured, but as [they are] paid as cleared to all plant securing contracts, regardless of technology, this could add billions of pounds to consumer bills.'
On Friday, a spokesman for EPH did not respond to request for comment.
Previously, a spokesman refused to comment on 'the specifics of ongoing development projects'.
The company had said it expected the plant to be compliant with the Government's climate goals and that it could be converted to 'zero-emissions operation' in future.
On Friday, a Neso spokesman said: 'As the delivery body for the capacity market, Neso works closely with the Government and industry to operate this market.
'Later this year we will run the annual T-4 and T-1 auctions, with the T-1 auction securing the rest of the required capacity for the 2025 to 2026 winter.'
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