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Released March 26, 2013 | GALWAY, IRELAND
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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) - One of the U.K.'s leading utilities has warned that the country is facing potential electricity blackouts within the next three years.
The comments were made by Ian Marchant, Chief Executive of SSE plc (Perth, Scotland), as he revealed that the company plans to shut down plants with a combined generating capacity of around 2,000-megawatts (MW) over the coming year. The decision will affect SSE's power stations at Ferrybridge, Keadby, Slough, Uskmouth, and Peterhead. It also stated that it will not make any new-build investment in gas-fired electricity generation in the U.K. until at least 2015. The reduction accounts for almost 25% of SSE's generating capacity.
"It appears the Government is significantly underestimating the scale of the capacity crunch facing the U.K.in the next three years and there is a very real risk of the lights going out as a result," Marchant warned. "Ofgem recently expressed real concern about the tightening of the UK's generation capacity margin that will follow expected plant closures in the next few years, predicting a 1:12 chance of 'the lights going out'. It is unlikely that the majority of the reductions in generation capacity and the delays to new investment we have announced today will have been included in this analysis, which highlights that the situation is likely to be even more critical than even they have predicted."
The company blamed 'challenging' market conditions for the move including continued extremely low 'spark spreads' and many new emission regulations, such as the Large Combustion Plant Directive (LCPD), the early introduction of a Carbon Price Floor at an 'unexpectedly high level' and the move towards full auctioning of CO2 emissions allowances under the EU Emissions Trading Scheme (ETS).
The company was particularly critical of the government's 'prolonged and ongoing uncertainty' around the Electricity Market Reform (EMR), in particular, a lack of clarity on the proposed timing and operation of the capacity payments mechanism which will set the level of return for investing in thermal power projects.
Marchant said: "The Government can reduce this risk very easily, by taking swift action to provide much greater clarity on its electricity market reforms and bringing forward capacity payments for existing plant from 2018 to 2014".
At the coal-fired Ferrybridge plant in Yorkshire, Unit One (490MW) and Unit Two (490MW) have opted out of the Large Combustion Plant Directive (LCPD) and will close once they have used up their allowed 20,000 operating hours in March next year. Unit Three (490MW) and Unit Four (490MW), which have been retrofitted with Flue-gas Desulphurisation (FGD) technology to comply with the LCPD will remain unaffected for now. A new 68 MW multi-fuel generation plant is currently being constructed at the Ferrybridge site as part of a £300 million joint venture between SSE and Wheelabrator Technologies, called Multifuel Energy Ltd. It wil be commissioned in 2015.
The gas-fired Keadby plant in Lincolnshire (gas-fired) will be 'deep mothballed' -- meaning that the plant will take up to a year to be brought back online. It means the immediate withdrawal of all 735 MW of capacity at Keadby. Plans for a new 710 MW CCGT plant at the Keadby site are ongoing but a investment decision has now been pushed back until 2016 at the earliest.
The Uskmouth coal-fired plant in Gwent is the UK's oldest and least efficient coal-fired power station and the plant is reaching the end of its technical life, SSE said. The 120 MW Unit 13 (120MW) will cease generation and be closed from next month. The two remaining units with a combined generation capacity of 240 MW will remain operational with another review next year.
SSE classed the Peterhead gas-fired plant in Aberdeenshire as 'one of the U'K''s most efficient gas-fired power stations'. It has a generating capacity of 1,840 MW but high transmission access charges in the north of Scotland, SSE had already limited the capacity to 1,180MW. From March next year, this will be reduced drastically to 400 MW. The company said the decision will have no impact on the proposed CCS project for Peterhead being developed in partnership with Shell UK. In the past week, the project was one of two shortlisted by the government for its 1.2 billion ($1.6 billion) carbon capture and storage (CCS) fund. For additional information, see March 25, 2013, article - UK Picks Top Carbon Capture Projects.
SSE's biomass plant in Slough, Berkshire is already loss-making according to the company and will remain so next year, which it blamed on the removal of the Carbon Credits system. Two units at the plant, which use ageing fluidised-bed biomass technology, will be decommissioned, reducing the capacity by around 60 MW.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
The comments were made by Ian Marchant, Chief Executive of SSE plc (Perth, Scotland), as he revealed that the company plans to shut down plants with a combined generating capacity of around 2,000-megawatts (MW) over the coming year. The decision will affect SSE's power stations at Ferrybridge, Keadby, Slough, Uskmouth, and Peterhead. It also stated that it will not make any new-build investment in gas-fired electricity generation in the U.K. until at least 2015. The reduction accounts for almost 25% of SSE's generating capacity.
"It appears the Government is significantly underestimating the scale of the capacity crunch facing the U.K.in the next three years and there is a very real risk of the lights going out as a result," Marchant warned. "Ofgem recently expressed real concern about the tightening of the UK's generation capacity margin that will follow expected plant closures in the next few years, predicting a 1:12 chance of 'the lights going out'. It is unlikely that the majority of the reductions in generation capacity and the delays to new investment we have announced today will have been included in this analysis, which highlights that the situation is likely to be even more critical than even they have predicted."
The company blamed 'challenging' market conditions for the move including continued extremely low 'spark spreads' and many new emission regulations, such as the Large Combustion Plant Directive (LCPD), the early introduction of a Carbon Price Floor at an 'unexpectedly high level' and the move towards full auctioning of CO2 emissions allowances under the EU Emissions Trading Scheme (ETS).
The company was particularly critical of the government's 'prolonged and ongoing uncertainty' around the Electricity Market Reform (EMR), in particular, a lack of clarity on the proposed timing and operation of the capacity payments mechanism which will set the level of return for investing in thermal power projects.
Marchant said: "The Government can reduce this risk very easily, by taking swift action to provide much greater clarity on its electricity market reforms and bringing forward capacity payments for existing plant from 2018 to 2014".
At the coal-fired Ferrybridge plant in Yorkshire, Unit One (490MW) and Unit Two (490MW) have opted out of the Large Combustion Plant Directive (LCPD) and will close once they have used up their allowed 20,000 operating hours in March next year. Unit Three (490MW) and Unit Four (490MW), which have been retrofitted with Flue-gas Desulphurisation (FGD) technology to comply with the LCPD will remain unaffected for now. A new 68 MW multi-fuel generation plant is currently being constructed at the Ferrybridge site as part of a £300 million joint venture between SSE and Wheelabrator Technologies, called Multifuel Energy Ltd. It wil be commissioned in 2015.
The gas-fired Keadby plant in Lincolnshire (gas-fired) will be 'deep mothballed' -- meaning that the plant will take up to a year to be brought back online. It means the immediate withdrawal of all 735 MW of capacity at Keadby. Plans for a new 710 MW CCGT plant at the Keadby site are ongoing but a investment decision has now been pushed back until 2016 at the earliest.
The Uskmouth coal-fired plant in Gwent is the UK's oldest and least efficient coal-fired power station and the plant is reaching the end of its technical life, SSE said. The 120 MW Unit 13 (120MW) will cease generation and be closed from next month. The two remaining units with a combined generation capacity of 240 MW will remain operational with another review next year.
SSE classed the Peterhead gas-fired plant in Aberdeenshire as 'one of the U'K''s most efficient gas-fired power stations'. It has a generating capacity of 1,840 MW but high transmission access charges in the north of Scotland, SSE had already limited the capacity to 1,180MW. From March next year, this will be reduced drastically to 400 MW. The company said the decision will have no impact on the proposed CCS project for Peterhead being developed in partnership with Shell UK. In the past week, the project was one of two shortlisted by the government for its 1.2 billion ($1.6 billion) carbon capture and storage (CCS) fund. For additional information, see March 25, 2013, article - UK Picks Top Carbon Capture Projects.
SSE's biomass plant in Slough, Berkshire is already loss-making according to the company and will remain so next year, which it blamed on the removal of the Carbon Credits system. Two units at the plant, which use ageing fluidised-bed biomass technology, will be decommissioned, reducing the capacity by around 60 MW.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
