Perth-based utility SSE has announced it will enter into consultation with employees and stakeholders at Fiddler’s Ferry Power Station, Cheshire, on a proposal to end commercial operations at three of the plant’s four units.
Although a final decision has not yet been taken, SSE’s expectation is that the three units will close by 1 April 2016, subject to the outcome of its consultation process.
The consultation with the station’s 213 employees and other stakeholders is expected to be completed around the end of March 2016.
The fourth unit will be unaffected as it has a contract to provide services to the electricity system for the winter of 2016-17.
Paul Smith, Managing Director, SSE Generation, said Fiddler’s Ferry power station had made a big contribution to the UK’s energy supplies for over 45 years, but the ‘economic realities’ of running the ageing plant at a loss could no longer be ignored.
He said: “We are fully aware of the impact this will have on our colleagues, their families, and the community and our priority is to support staff during the consultation process.
“The reality is the station is ageing, its method of generating electricity is being rendered out of date and it has been and is expected to continue to be loss-making in the years ahead.
“Sustaining for too long loss-making power stations would undermine our ability to invest in modern generation plant in the UK.”
Fiddler’s Ferry failed to secure a contract for electricity provision in 2019-20 in the recent Capacity Market Auction in December 2015.
While three of its four units have a Capacity Market contract for 2018-19, the economic outlook in the generation market has changed substantially since it was awarded and it is projected to incur unsustainable losses even with this contract.
The regulations of the Capacity Market mean SSE will make a payment of around £33m to the Government if a decision to terminate its Transmission Entry Capacity (TEC) and cease commercial operations is taken.
Smith added: “The fact it makes more sense for SSE to contemplate making a substantial payment in lieu of the capacity agreement relating to Fiddler’s Ferry in 2018-19 demonstrates just how economically challenged Fiddler’s Ferry has become – its losses are unsustainable.
The UK has committed to ending coal-fired electricity generation by 2025 at the latest as it moves to cleaner forms of generation to meet national environmental targets.