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Interview T he past five years of accounts for Intergen's European business make for grim reading. Turnover almost halved from €1.2 billion in 2008 to €600 million in 2012 and the bottom line is red throughout. As a business almost exclusively based on gas generation, it has been at the sharp end of the power market. An excess of power capacity combined with high gas prices have put the squeeze on Intergen's three plants in the UK and two in the Netherlands. These power stations have dropped down the merit order and run just 15-20 per cent of the time. Mark Somerset, vice president and general manager, admits conditions have been "very tough", but appears calm and focused on the future. Intergen is a global company and the UK had previously been a "very profitable" market. "We do believe that markets are cyclical in nature. We have gone through a tough time and we will go through a better time." As old coal power stations retire faster than new forms of generation replace them, that better time could be imminent. Intergen is "front of the queue" to build new gas power stations, says Somerset – if government gets the incentives right. We meet the fortnight after Intergen signs a £1 billion exclusivity contract with Siemens to build two gas-fired power stations. Somerset thinks Intergen has got a good deal. "It is a buyers' market. [Siemens] are not building much in Europe, for obvious reasons. We hope we've caught it at a very good time," he says. The agreement includes a "firm offer" on price, performance guarantees and a schedule for building and maintaining the stations. The proposed facilities, totalling 2.1GW of capacity, adjoin two of the company's three UK power plants at Spalding, Lincolnshire and Gateway, Essex, and will be able to take advantage of existing gas and electricity transmission links. "They should be very competitive," says Somerset. This puts Intergen at an advantage over other wouldbe gas power station developers, he says. "They will say they are 'shovel-ready', because they have planning consents, but they don't have construction agreements like we do. We want to capitalise on that." Intergen still needs to secure finance before it can break ground, however. The world has changed since the late 1990s, when one of Intergen's UK plants was financed without so much as a power purchase agreement (PPA). Now, Somerset expects even new, efficient plant to run only half the time, picking up the slack after nuclear and renewables have maxed out. That means it will be "very expensive" unless there are some income guarantees. "New projects today need a large creditworUTILITY WEEK | 15th - 21st November 2013 | 9