Scottish and Southern Energy has shut down a loss-making gas-fired power station and scaled back plans for a newbuild facility because of “increasingly difficult” market conditions.
The company has suspended commercial operations at its 120MW Fife Power Station, with 21 staff being redeployed within SSE.
And the company has scaled back its plans for a power station it wants to build at Baglan Bay in South Wales.
Originally SSE had planned for a 870MW, two-unit combined cycle gas turbine power station, but now it says it will push ahead with proposals for a 450MW, single CCGT unit only.
An investment decision on the scaled-back Welsh project will not be taken until next year at the earliest and SSE says it will depend on the emerging shape of the electricity market following the UK government’s current EMR consultation.
This means that the power station, if built, will not be operational before late 2015: SSE had previously envisaged that it would be up and running by 2013.
SSE’s generation and supply director Alistair Phillips-Davies said: “We have made it clear that all of our power stations have to be able to operate economically over the medium term. The market for smaller gas-fired generation has become increasingly difficult. Fife Power Station will be loss-making this year and is forecast to remain so, particularly when the impact of the very high transmission access charges that apply in Scotland are taken into account.”
Mr Phillips-Davies added: “The medium term outlook is also challenging, which is why we have decided to scale back the Abernedd development to one unit and to defer the project by at least two years compared with the original timetable. Amongst other things, this will allow us to assess the likely impact of electricity market reform as it emerges over the next year and to further analyse the economics of any investment before taking a decision to go ahead with a CCGT unit.”
He explained that while SSE had faith in CCGT, “the right market signals need to be there if the necessary investment decisions are to be taken”.