Engie closes 1 GW coal plant while Eggborough gets stay of execution

Engie has announced the closure of the Rugeley coal-fired power plant in England. The 1 GW plant will close in the summer with the loss of 150 jobs and Engie stated that present market conditions made it too unprofitable to keep open.

Meanwhile Eggborough coal-fired power plant has been granted a 1 year extension as the UK government endeavours to adapt to an evolving situation whereby coal plants are shutting down for good, while new gas and nuclear builds are not yet in place to compensate.

The Rugeley plant is the latest facility to be scheduled for early closure, after SSE announced the closure of the 2 GW Fiddler’s Ferry earlier this week.
Rugeley coal power plant
“Unfortunately market conditions for UK coal plant have deteriorated rapidly in recent years, as a result of a continued fall in power prices on the back of a commodity market decline, and increases in carbon costs,” Engie said in a statement.

“Under such conditions, there is no prospect of the power station recovering its future operating costs,” it added.

Investment bank Jefferies said it expects more coal plant closures this year in Britain if the relative profitability of burning gas over coal by utilities continues.

There was better news for Eggborough coal-fired power plant, after its owners signed a contract with National Grid which will enable it to remain open until March 2017, a year longer than previously planned, its owner said on Tuesday.

Eggborough Power Limited was awarded a contract under the National Grid’s so-called Supplemental Balancing Reserve (SBR) scheme to provide backup power next winter.

In September, the 2 GW power station was earmarked for closure, putting 262 jobs at risk, as it was too costly to continue running.

The 53-year-old plant’s contract with National Grid covers 775 MW of capacity and will secure up to 235 jobs, Eggborough Power said in a statement .

The Department of Energy and Climate Change said Britain was not at risk of blackouts.

“We are clear that providing a secure supply of affordable energy for our families and businesses is non-negotiable. There will be no impact on this winter and action has already been taken to secure extra capacity for next winter,” a spokesman said. “We will continue to work alongside National Grid and Ofgem to take whatever additional steps are necessary to protect our energy supply.”

Ofgem said it was “confident” about next winter’s power supply but added that there was “no room for complacency”.

Other observers are perhaps more circumspect. Paul Verrill of energy consultancy EnAppSys told Power Engineering International,”Rugeley did not hold a 2019 Capacity Mechanism contract but still the signals coming out of the coal stations should lead to a higher capacity market price and more new build contracts. There are a number of projects developed out there that could be online in two to three years but this relies on investors having confidence in the GB (and Europe) Markets to bring these projects forward.”

“If this does not happen the question will be what further will the government be forced to do to secure security of supply although it is hard to see that a climbdown on the coal position would be palatable given the public aspirations stated and the UK’s reliance on the switch to gas (as opposed to accelerated renewable growth or CCS technology) to reduce carbon emissions. There remains however the spectre of nuclear closures to come and delay in the nuclear new builds which does not reassure investors that the direction in the GB market is clear.”

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