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Analysts have warned that gas-fired generators braving dwindling returns in anticipation of gains in the reformed capacity market could be disappointed.
In a market report, Nomura said market players knew ageing gas capacity needed to be closed down in the face of UK power market oversupply. But they said the companies were in a game of brinkmanship. The situation, the analysts said, was exacerbated by uncertainty over Electricity Market Reform, gas price volatility, and other risks that were “paralysing decision making”.
Gas generators awaiting opportunities in the reserve capacity market faced competition from demand-side participants, the analysts said.
This article first appeared in Utility Week’s print edition of 15 June 2012.
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