RWE npower will today unveil a £1 billion plan to build a new power station on the site of one of the oldest coal-fired plants in Europe, The Times has learnt.

The German energy giant wants to replace its existing facility in Tilbury, Essex with a 1,600 megawatt “clean coal” unit that could cut carbon emissions by two million tonnes a year. If RWE npower secures planning consent, the old station, which celebrated its 50th anniversary last year, would be wound down by 2013.

The moves comes amid growing fears of a “capacity gap” in the UK.

Britain is expected to lose up to 25 gigawatts of generating capacity over the next ten to fifteen years as nuclear plants are decommissioned and tighter environmental legislation cuts production at older coal and oil-fired plants.

RWE npower has already this year announced plans to build a new power station in either Wales or Nottingham but Andrew Duff, chief executive, said more action was needed across the industry to avoid a supply crunch and the possibility of higher prices.

He said: “A lot of people are focused on 2020 and beyond but there are a number of plants in the UK closing between 2010 and 2015 and there could be a significant supply shortage.

“Tilbury is due to close around 2013 to 2015. London is very short of power, an awful lot of demand is created in the South, with an awful lot of generation in the north of the country, so it makes a lot of sense for us to put a new plant there.”

The plans also reflect RWE’s recent comments that it will look to grow organically in the UK rather than embark on an acquisition spree.

Last month, Harry Roels, RWE chief executive, said the UK acquisition market was “overheated” when dismissing suggestions the group may bid for Scottish & Southern Energy. Rival German group E.ON is thought to be circling SSE.

RWE has built up a war chest by selling Thames Water last year for £8 billion.

The new Tilbury power station would generate enough electricity for 80 per cent of Essex and could be operational within the next six years.

RWE npower says it would have the capacity to cut carbon emissions by 22 per cent per unit of electricity generated through a combination of more efficient burning and use of bio-mass such as sawdust and pine kernel to replace up to 4 per cent of the coal in the mix.

Mr Duff said the plans, drawn up over the past year, have also been designed to accommodate carbon capture and storage at a later date.

“There are still many financial, legal, regulatory and technical hurdles to clear on CO2 transportation and storage technology,” he said. “However it is too important to ignore.”

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