This Extended Expert View looks at Centrica's strategy of expanding its UK generation portfolio and diversifying it from natural gas to coal. We then discuss how this strategy fits in with the future trends in the country's power generation industry in general.

• Using Centrica's case, the brief focuses on the UK power market in general, exploring the links between electricity generation and supply.
• British Energy, EDF Energy, E.ON UK, RWE npower, Scottish Power and SSE form the backdrop against which Centrica's position is analysed and assessed.
• The brief also discusses the range of scenarios for the UK power generation industry meeting its carbon emissions targets to 2010.

Centrica has in the last few years greatly grown its electricity supply business, but has remained light on generation assets. Not only is the company facing a projected 32TWh power production shortfall by the end of 2009, but its existing generation plant is almost entirely gas-fired, creating a dangerous disbalance in its asset base.

Datamonitor has considered three basic scenarios of the evolution of the UK's generation portfolio to 2010. In all of them, the country requires significantly less coal and more gas in its generation mix, if it is to come close to satisfying its Kyoto commitments under the EU burden-sharing mechanism.

• Based on a detailed evaluation of Centrica's Net Power Trading Requirement for 2005-09, vis-?-vis the other leading UK power utilities.
• Reflects Datamonitor's carbon compliance scenarios for the UK power sector in the period to 2010, and their impact on power generators' strategies.