SSE to scrap 1GW of coal power capacity

SSE will shut the remaining 1GW of capacity at its Ferrybridge coal-fired power plant by the end of March next year as part of its plans to reshape its generating portfolio towards lower carbon options.

The shutdown of the Yorkshire-based plant will coincide with the expected loss of the 2.4GW Longannet coal-fired power plant in Scotland, raising concerns over the UK’s security of supply in the winter before the government’s capacity auction safeguards come into effect.

But SSE’s managing director of generation Paul Smith said alongside the company’s financial reports on Wednesday that running the loss-making plant beyond Mach next year is not sustainable.

“[W]hile this was a difficult decision to take, it was the right one,” Smith said.

“Financially, the station is currently loss-making and is anticipated to lose another £100 million over the next five years; and environmentally coal is a major emitter of CO2, which means it has a time-limited role in the UK’s electricity mix,” he added.

SSE’s recent review of its coal-fired capacity revealed that the 50 year old plant requires heavy investment to maintain while the UK’s carbon tax is set to erode profits further, making gas-fired generation a more profitable option for the company.

In addition, regulation at a UK and EU level supports a move to lower carbon generation or expensive infrastructure upgrades to mitigate carbon emissions, SSE said.

“The combination of all of these factors results in reduced ‘load factors’, and therefore income, which does not cover the inherent high costs of maintaining and operating aging coal-fired generation plant,” SSE said.

However, the generator will continue to generate power from its almost 2GW Fiddler’s Ferry coal-fired plant following its success in the UK’s capacity auction late last year. The plant is now contracted to provide power to the national grid in 2018/19 and SSE confirmed that it will enter the plant into this year’s auction for delivery in 2019/20.

SSE said keeping the plant running would contribute both to a diversity within its own generation portfolio but also to the UK’s security of supply which has been whittled down as capacity closes before low carbon options are deployed.