Gas plant gets reprieve after missing capacity market deadline

The developer of a new 1.9GW combined cycle gas turbine (CCGT) plant in Greater Manchester has been given a reprieve after it missed a key capacity market deadline.

Carlton Power received a notice terminating a £480 million capacity market contract for the project after it failed to meet the ‘final commitment milestone’. The Department of Energy and Climate Change (Decc) has now agreed to push back the deadline by around three months.

Trafford power station was one of only two new CCGT plants to be awarded the subsidy in the first two rounds of the main four-year-ahead (‘T-4’) auction. It was the only one to win a full 15-year contract. With a contracted capacity of around 1.6GW, the plant will receive more than £32 million in subsidies each year to help secure the UK’s electricity supplies if it goes ahead.

Carlton Power attributed the missed deadline to a failure to tie down sufficient financing. A spokesman for the company said: “The secretary of state has agreed that, in accordance with the capacity market rules, the termination date has been extended [from 26 September] to 19 December 2016 to enable the project to achieve financial close with its investors. Decc remains very supportive of the Trafford project.”

Getting new CCGT plants built was one of main aims of the capacity market scheme and it has been widely criticised for failing to do so. Most of the contracts awarded to new capacity in the first two auctions were instead won by small-scale diesel generators.

The termination of Carlton Power’s contract would probably have put an end to the Trafford plant, which has been the main example of the mechanism working as planned. In May the government confirmed a number of changes to the capacity market following a consultation with industry.