UK could see 5GW of thermal power capacity return for winter 2017

17 October 2016 17:18 Source:ICIS

Almost 5GW of thermal capacity is set to return to the UK wholesale electricity market by the start of winter 2017 following Friday’s publication of pre-qualification results for upcoming capacity market auctions.

The results, published late on Friday, revealed the plants that qualified to participate in auctions for capacity that will be procured for 2017-18 and 2020-21 (see EDEM 14 October 2016).

While the auction for 2020-21 had been long in the planning, the UK government took the drastic step of announcing an emergency capacity market auction for 2017-18 earlier this year (see EDEM 1 March 2016). The decision, which prompted a temporary sell-off on the Winter ‘17 contract, was taken following the closure of several coal- and gas-fired plants and concerns that others could follow suit.

And the government’s intervention has had the desired effect, with two power stations – Barking and Uniper’s Killingholme – potentially returning from mothball if successful in January’s auction (see table).

Plants that secure contracts are obliged to make themselves available to the market for the duration of their contracts or face financial penalties.

RWE’s 1.6GW coal-fired Aberthaw power station also pre-qualified, meaning that any absence from the wholesale market is likely to be short-lived if it wins a contract. The utility indicated earlier this year that it plans to withdraw Aberthaw from the wholesale market at the start of next April (see EDEM 26 April 2016).

Transmission entry capacity (TEC) at SSE’s 2GW Fiddler’s Ferry, Centrica’s 1.25GW South Humber combined-cycle gas turbine (CCGT), and SSE’s 1.18GW Peterhead CCGT is also being increased in anticipation of securing contracts.

However, the auction is certain to be competitive, with 71.6GW of capacity – or 61.9GW de-rated which means allowance is made for expected outages – pre-qualifying, some conditionally, to participate. This includes existing interconnectors and a sizeable amount of embedded thermal generation, some of which will be newly built.

The government said it would procure 53.8GW of capacity in January’s auction earlier this year (see EDEM 8 July 2016).

However, it seems that 5.4GW of coal-fired capacity spread across SSE’s Ferrybridge, ScottishPower’s Longannet and the Rugeley power stations will not be returning to the market in light of their absence from the pre-qualification register.

Centrica’s 665MW Killingholme CCGT, which withdrew from the wholesale market last year and closed completely in March, is also absent from the list, which can be downloaded from here .

By Henry Evans