Longannet closure undermines a balanced energy policy

We had final confirmation today that Longannet coal-fired power station is to close by the end of March 2016. Not unexpected given Scottish Power’s announcement earlier this year when it wasn’t selected by National Grid for the voltage capacity contract, but a big blow to workers at the plant and the wider Fife economy.

Longannet, which opened in 1972, is one of the biggest coal-fired power stations in Europe. In fact, it has several power units under the same roof, providing flexible generating capacity that Scotland is now desperately short of. The power station employs more than 230 staff, but Scottish Power said it hoped to avoid compulsory redundancies.

Scottish Power, said the high cost of connecting to the grid was to blame. It is certainly the case that discriminatory transmission charges have played a significant role in the closure. Ofgem’s long delayed Project TransmiT has made only small changes to the extra charges that fall on Scottish and North of England generators.

In March, I set out two other reasons for closure. One is company indifference, with only limited investment, partly caused by the parent company’s capital funding pressures. The other is UK and Scottish government energy policy. The reliance on intermittent wind power means that we are having to import energy from England for part of one day in five. The closure of Longannet will undoubtably increase that reliance.

National Grid accepts in their Future Energy Scenarios that the UK faces a tighter energy crunch than last year, with more contingency measures needed to ensure the lights stay on. The gap between total electricity generating capacity and peak demand would fall to just 1.2% without measures in place such as paying moth-balled power plants, like Peterhead in Scotland, to be ready to come online and paying factories to be prepared to power down if needed. These are tight margins and it would have been prudent to keep Longannet going until new capacity kicks in from 2018.

Scottish Power has also confirmed that it is abandoning plans to build a new gas-fired power station at Cockenzie in East Lothian. Again not unexpected, given the economics of gas plants and discriminatory transmission charges. However, that would have provided dispatchable power to balance the system in Scotland.

Scotland needs a balanced energy generation policy. Today’s announcements means the balance will be coming from elsewhere in the UK. It also remains to be seen if there is enough capacity in the system to keep the lights on if we have a cold winter.

 

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