THE future of Britain’s first proposed coal-fired power station in more than three decades has been thrown into doubt after Eon said it was putting investments in new plants “on hold” due to soaring financing costs and the economic downturn.

The company expects a government decision soon on whether it will get planning permission to build a controversial £1.5 billion coal-fired station at Kingsnorth in Kent. Last week, however, Wulf Bernotat, chief executive of the German energy giant, signalled that even if Eon gets the green light the company may put it off until debt markets improve.

He said: “There are a number of conventional power-plant projects for which we have made no firm commitments at this stage. Component prices have just passed a peak and they may come down in the wake of lower steel and other commodity prices. Thus keeping such projects on hold looks the right thing to do.”

The Kingsnorth project, which has become a lightning rod for both environmental campaigners and the energy industry, is one of many in Eon’s €63 billion (£53.9 billion) global-investment programme that will be affected.

Energy-industry sources say the increased cost of capital has forced companies across the sector to review investment plans.

Bernotat said: “We are entering a period of the year when we review our budgets and investment plans for next year. In these uncertain times, the board prefers to err on the side of caution.”

Kingsnorth would be the UK’s first new coal station since the Drax power plant was built in 1974. It is seen as a bellwether for the government’s stance on the country’s future energy mix and is the first big test for Ed Miliband, the new energy secretary.

Such delays are a worrying development for politicians increasingly concerned about the pace of investment in the sector. About 25% of the nation’s capacity is set to be retired over the next decade.

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