Business

SSE to close most units at a coal-fired power station

Fiddler's Ferry coal fired power plant in Cheshire Image copyright Getty Images

Energy company SSE has said it expects to close three out of four units at its Fiddler's Ferry coal-fired power plant in Cheshire by 1 April.

The 45-year old plant has been loss-making for two years and was forecast to continue losing money until 2020.

Renewable energy and cheap gas prices have made coal-fired power plants increasingly expensive to run.

SSE has entered into consultation with staff. The closures could mean up to 213 job losses.

The power plant provides two gigawatts of power, to the north-west of England, which is enough to supply around two million homes with electricity.

A fourth unit at the plant will remain open as it has a contract to provide power for the National Grid next winter.

Three months ago, the government announced the permanent closure of all coal-fired power plants by 2025 as part of plans to lower carbon emissions from the electricity sector.

""The reality is the station is ageing, its method of generating electricity is being rendered out of date and it has been and is expected to continue to be loss-making in the years ahead," Paul Smith, managing director of the generation business at SSE, said in a statement.

Fiddler's Ferry power plant won a 2018/19 capacity market contract from the government for three of its units in UK's first capacity market auction. The contracts are intended to ensure there is sufficient power capacity on the electricity network to ensure that the lights stay on when renewable energy production is low.

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

Mr Smith said: "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."

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

The likely closure of the Fiddler's Ferry coal-fired power plant follows an announcement by SSE last May that it was closing down its Ferrybridge power station in Yorkshire border in March 2016.

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