Ofgem reassures on blackouts following coal plant closure

The UK Government and Ofgem, the electricity regulator, have reassured consumers that blackouts will not occur as a result of the closure of a major coal plant, Fiddler's Ferry, in northern England. Extra capacity has been secured for this winter, however measures are needed to ensure supplies next year. The closure is a blow to the government as the long-term contracts awarded to suppliers for keeping power plants on standby for times when renewable energy production is low have been a key component of its electricity market reform. Critics of the government claim that, despite shutting down coal plants, it continues to promote other fossil fuels, with huge subsidies and support to oil, gas and fracking, and that the renewables sector has been "devastated" by recent policy change.

The UK government and the electricity regulator moved on Thursday to reassure consumers that they will not face blackouts as the result of the closure of most of a major coal power plant.

Operator SSE said the closure of three out of four generation units at the 2GW Fiddler’s Ferry near Manchester, which has made financial losses for two years, was likely to take place on 1 April.

The move was seen as significant because the company had a contract in place to provide back-up generation from the site, but falling oil and gas prices and long-term signals from government on phasing out coal have made coal-fired plants much less economical in the UK.

Ofgem said supplies of electricity for this winter would be unaffected, but that measures were needed to ensure supplies next year.

Ministers were understood to be disappointed at the SSE move, which highlights potential problems with the government’s electricity market reforms, under which generators are handed long-term “contracts for difference” to supply electricity.

The Department of Energy and Climate Change said: “There will be no impact on this winter and action has already been taken to secure extra capacity for next winter. We will continue to work alongside National Grid and Ofgem to take whatever additional steps are necessary to protect our energy supply.

“SSE’s intention to break their contract is extremely disappointing and they will have to pay a significant penalty.”

Ofgem said: “The planned closure of Fiddler’s Ferry power station will have no impact on security of energy supply for the current winter. We are confident that electricity supplies will be secure next winter but there is no room for complacency.

“There are a range of tools to manage the electricity system. National Grid will be conducting its detailed review of energy security for next winter in due course. National Grid’s review will take into consideration all relevant factors, including this announcement.”

Greens argued that the government’s lack of support for renewable energy would create problems with filling any supply gap with low-carbon power.

Molly Scott Cato, Green party MEP for the south-west, told the Guardian: “The move into the post-fossil era must inevitably bring about the end of coal-fired power-stations. It is of course difficult for those who lose their jobs during such an energy transition, but the German example proves that renewables actually offer many more skilled jobs per kWh than coal.”

She added: “The problem in this country is the mixed messages government is sending out on energy. While shutting down coal it continues to promote other fossil fuels, offering huge subsidies and support to oil, gas and fracking. It has also devastated the renewables sector through recent policy changes, destroying the jobs that could replace those lost in coal generation.”





A surge in renewable energy production and cheap gas prices have effectively priced coal-fired power plants out of the market in Britain.



SSE said it was consulting staff on the closure but that shutdown from 1 April was a likely outcome.



“The plant at 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,” said Paul Smith, managing director of the generation business at SSE, in a statement.



Fiddler’s Ferry power plant, which employs 213 people, won a 2018-19 capacity market contract for three of its units in Britain’s first ever capacity market auction.



These contracts reward successful bidders for keeping power plants on standby so they can be called upon when renewable energy production is low. They are a major pillar of the British government’s electricity market reform.



SSE said it would incur a penalty charge of around £33m if it breaches the contract by closing the units.



Last month, SSE was unsuccessful in gaining a capacity contract for the power plant for the year 2019-20.



The fourth generation unit at Fiddler’s Ferry is contracted by network operator National Grid to provide market balancing services during the winter of 2016-17.



SSE declined to comment on what will happen to the unit after that contract expires.