SSE yesterday formally revealed plans for the early closure of three units at the Fiddler's Ferry coal-fired power station in Cheshire, adding fuel to fears of looming UK energy supply gap.
The utility giant said three out of the station's four units will "likely close" by April 1 2016 due to "continuing challenging economic and environmental conditions for coal" as the UK moves towards a cleaner energy mix.
SSE is currently in consultation over the planned closures, with a final decision expected at the end of next month. The 45-year-old coal-fired plant has incurred "substantial losses" over recent years and these are projected to continue through to 2020, SSE said.
Paul Smith, managing director of generation at SSE, said the economic challenges of running an ageing coal plant could no longer be ignored. "The reality is the station is ageing, its method of generating electricity is being rendered out of date and it has been and is expected to continue to be loss-making in the years ahead," he said in a statement.
"Sustaining for too long loss-making power stations would undermine SSE's ability to invest in modern generation plant in the UK," he added.
The closures would wipe out 1.5GW of power capacity from the UK grid, despite the three units winning a government subsidy contract to provide power in 2018/19. SSE said the move would see it incur a charge of around £33m for pulling out of the contract early. The fourth unit will continue to run next winter, as it has a contract with National Grid to supply grid balancing services through to 2017.
The move comes during a sustained period of low coal prices, and follows a recent commitment from the UK government to phase out coal altogether by 2025 at the latest. Cheap gas prices and the surge in renewable generation have further squeezed the market for coal-fired generation, leaving it ultimately unsustainable at older plants such as Fiddler's Ferry.
The news will be welcomed by green groups, but will further fuel fears across government that supply margins will become extremely tight towards the end of the decade unless new thermal capacity can be delivered.
In related news waste and recycling services giant Viridor announced yesterday it has targeted staff at Scottish Power's soon to be closed coal-fired power station Longannet in a recruitment drive for its £1.8bn energy recovery facilities programme.
Viridor said employees at the power station may have the "right transferable skills" for a job at its recycling and energy recovery operations. The Longannet plant - Scotland's last coal-fired station - is due to close in March, after more than 40 years of service.
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