Rugeley power station in Staffordshire has become the second coal-fired power station in less than a week to announce its early closure as the crisis in the coal sector deepens.
Low commodity prices and tighter environmental legislation have forced Rugeley to close early, majority stakeholder French energy giant Engie announced yesterday. The 1GW station will close by early summer, threatening 150 jobs, the company confirmed.
The shock announcement follows just days after utility SSE revealed plans for the early closure of three units at the Fiddler's Ferry coal-fired power station in Cheshire.
Engie, formerly known as GDF Suez, owns 75 per cent of the Rugeley plant. It said the market conditions for coal plants in the UK have "deteriorated rapidly" in recent years as falling power prices and a crash in commodity prices have been compounded by higher carbon costs.
The UK government also signalled last year that it expects all unabated coal plants in the UK to close by 2025 at the latest, as part of its decarbonisation strategy.
David Alcock, chief executive of Engie's energy infrastructure division, said the decision to close the plant had been taken with deep regret. "We implemented a number of changes at Rugeley a year ago in order to help maintain operations at the site but a combination of falling prices and the impact of various market changes has now made this unviable," he said in a statement.
The latest closure is likely to further fuel renewed fears of an energy supply crisis, as concern mounts that new supply will not come online early enough to make up for the loss of coal-fired generation. The UK government has pledged last autumn to phase out unabated coal-fired generation completely by 2025, but only if the shift to replacement gas capacity can be achieved in time.
Earlier this week Andy Koss, chief executive of Drax power station, warned the UK would miss its 2025 deadline unless the right incentives are put in place to encourage alternative forms of generation. "If sufficient new build is not coming through then the government will have to look again at whether 2025 is the right cut-off date," he told the Financial Times.
A spokeswoman for the Department of Energy and Climate Change insisted the Rugeley closure would not affect supply this winter, and added that National Grid has already accounted for the risk of early coal plant closures in its capacity predictions for next year's reserve capacity.
"We are clear that providing a secure supply of affordable energy for our families and businesses is non-negotiable," she said in a statement.
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