UK's SSE mulls options for non-contracted plant

OREANDA-NEWS.  UK utility SSE has said it will continue to monitor market conditions before making decisions on the future of its Ferrybridge and Peterhead power stations, as well as its planned new-build plant at Abernedd, which were unsuccessful in last month's power capacity market auction.

SSE was granted capacity agreements for over 4.4GW of generation capacity in the UK's first capacity market auction, but a further 2.8GW — its existing Ferrybridge and Peterhead plants, one unit at Fiddler's Ferry and its planned Abernedd project — exited the auction without an agreement, leaving their futures uncertain.

The utility must decide whether to move units 3 and 4 of 450MW capacity each at the Ferrybridge coal-fired plant into the transitional national plan (TNP) for the EU's Industrial Emissions Directive (IED) before the end of the calendar year and it remains unknown whether failing to be contracted in the capacity market auction will affect this decision.

The units are currently listed under the IED's alternative option to the TNP, the so-called "limited life derogation" which allows them to operate for a maximum of 17,500 hours from 1 January 2016 and forces them to close by 31 December 2023 at the latest. But the TNP would give SSE until 2020 to decide whether it wants to invest in making the capacity compliant with the new emissions requirements. Units 1 and 2 at Ferrybridge closed last year under the IED's predecessor, the Large Combustion Plant Directive.

The 1.2GW Peterhead gas-fired plant is currently contracted under transmission system operator (TSO) National Grid's supplemental balancing reserve (SBR) scheme for this winter, which keeps capacity outside of the wholesale market in reserve for periods of particularly strong demand, effectively as a forerunner for the capacity market which will not be implemented until 2018. National Grid's SBR contract for Peterhead only runs until the end of this winter, but SSE said that the TSO may opt to extend its agreement for future winters. The utility also said that it would consider entering the plant into this year's capacity market auction, after it was not contracted last month.

SSE had been aiming to make a final investment decision (FID) for its planned construction of a new 440MW combined-cycle gas turbine plant at Abernedd in south Wales this year, but said that this would be dependent upon the results of the capacity market auction, suggesting that the project's failure to be contracted could push its timeframe back.

SSE's trading statement for the first nine months of the financial year showed a sharp reduction in its coal-fired generation year-on-year following the closure of units 1 and 2 at Ferrybridge and after generation economics swung in favour of gas burn during the summer months. The utility's coal plant produced 5.1TWh over the period, compared with 11.3TWh a year earlier. Output from SSE's gas-fired plant was virtually unchanged at 7.5TWh, down only marginally from 7.6TWh in 2013.