Power firm SSE has today announced it will enter into consultation with employees and stakeholders at Fiddler’s Ferry power station, Cheshire, about a proposal to end commercial operations at three of the plant’s four units.
Although a final decision hasn’t yet been taken, SSE’s expectation is that the three units will likely close by April 1, subject to the outcome of its consultation process.
The fourth unit will be unaffected as it has a contract to provide services to the electricity system for the winter of 2016/17.
SSE said it had taken “this difficult step” due to continuing challenging economic and environmental conditions for coal as the UK moves towards a cleaner mix of electricity generation.
The ageing coal fired station has suffered heavy losses in recent years and this is expected to continue through to 2020.
SSE made the announcement late this afternoon after telling employees earlier today. The consultation with the station’s 213 employees and other stakeholders, including local politicians, is expected to be completed around the end of March.
Subject to the outcome, SSE will be discussing options for future employment within the group with its staff, including any potential decommissioning work at the site, with a view to avoiding redundancies.
SSE said it would actively seek to avoid, but could not rule out, some compulsory redundancies if an ongoing role for the station units cannot be identified.
Paul Smith, managing director, generation, SSE, said Fiddler’s Ferry power station had made a big contribution to the UK’s energy supplies for more than 45 years, but the economic realities of running the ageing plant at a loss could no longer be ignored.
He added: “We are fully aware of the impact this will have on our colleagues, their families and the community, and our priority is to support staff during the consultation process.
“The reality is the station is ageing, its method of generating electricity is being rendered out of date and it has been and is expected to continue to be loss-making in the years ahead.
“Sustaining for too long loss-making power stations would undermine SSE’s ability to invest in modern generation plant in the UK.”
Fiddler’s Ferry failed to secure a contract for electricity provision in 2019/20 in the recent Capacity Market Auction. Three of its four units have a Capacity Market contract for 2018/19 but the economic outlook in the generation market has changed substantially and the power station is projected to incur “unsustainable” losses even with this contract.
The regulations of the Capacity Market mean SSE will make a payment of around £33million to the UK Government if a decision to terminate its Transmission Entry Capacity and cease commercial operations is taken.
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.”