HomeCoal FiredBlow for UK as Manchester gas power plant runs into trouble

Blow for UK as Manchester gas power plant runs into trouble

Britain’s energy capacity margin just got tighter as it emerged that a key gas-fired power plant in the northwest of the country is now in doubt.

Carlton Power’s Trafford gas-fired power plant in Manchester, England has failed to secure investment and will not now meet its original generation date of October 2018.
Carlton Power
The 1.9 GW plant, set to power 2.2 million homes, was due to be commence construction in the summer under a subsidy scheme called the capacity market, designed to ensure Britain has as much electricity as needed.

Carlton Power signed up to build the plant in return for subsidies of more than à‚£30m each year for 15 years. On top of the ‘retainer’-style payment, it would then get revenues from selling electricity into the wholesale market.

However industry observers say the subsidy Carlton signed up to isn’t nearly sufficient.

Mike Benson, Carlton Power’s business development director, told the Daily Telegraph securing investment had proved “more difficult than we would have hoped” due to a combination of long-term policy decisions that had skewed the market, and uncertainty caused by recent cuts to wind and solar subsidies.

“Despite the widespread acceptance of the need for new gas fired generation, there is no market signal to support that investment,” he said.

He added: “The recent changes in government support for renewables is an issue that concerns the investors we are talking to, as this demonstrates an increase in political intervention and uncertainty over the long term structure of the UK market.”

If Carlton Power fails to secure investment for the Trafford plant by next summer its subsidy contract will lapse and it will face an à‚£8 million penalty.

Ministers would have to make up any shortfall in electricity supplies for 2018 by offering subsidies to other plants, such as old mothballed coal or gas plants, or diesel generators.

Responding to a request for comment by Power Engineering International, Carlton Power spokeseperson Paul Taylor said the company ‘is working hard to secure the finance for the project.’

There are more than a dozen proposed gas-fired plants with planning permission, but many have been on hold for years.

The Telegraph article highlighted that gas remains the most economic form of large scale electricity generation and could deliver reliable and flexible electricity at a long term price of around à‚£72 per megawatt-hour, compared with the à‚£92.50 per megawatt-hour guaranteed to Hinkley Point C nuclear power plant.