UK could pay £420m for keeping coal-fired power stations open this winter

National Grid ESO has confirmed it has agreed on contingency contracts with four coal units

Big Zero Report 2022

National Grid ESO has revealed that operators of coal-fired power stations are expected to be paid up to £420 million to extend the operational lifespan of the plants this winter and provide backup power to the grid.

In June, the Business Secretary confirmed that the government was in talks with energy companies to keep coal power stations open to deal with the energy crunch caused by rising energy prices and the war in Ukraine.

The electricity system operator (ESO) has said it has contracted with four coal units with an estimated total capacity of 1.9GW.

These four units were due to cease commercial operations ahead of this winter – the ESO added that it was in discussions with a fifth one.

These four units include two units at EDF’s West Burton A and two at Drax Power Station.

In its presentation, National Grid ESO stated: “We expect the upfront cost to be in the region of £220 million to £420 million subject to the procurement and use of the coal.”

The units contracted are expected to be dispatched at the request of the ESO, in cases when all commercial options within the Balancing Mechanism are exhausted.

This could be in response to a generation shortfall over an extended period or a short-term margin issue.

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