SSE Regulatory News (SSE)

SSE plc

PROPOSED CLOSURE OF FIDDLER'S FERRY COAL-FIRED POWER STATION

SSE plc has completed a review of its Fiddler's Ferry Coal-Fired Power Station and proposes to close the remaining operational capacity at Warrington, Cheshire. SSE is now commencing consultation with employees and trade unions with a view to closing the station by 31 March 2020.

The station has a combined operational capacity of 1,510MW and holds Transmission Entry Capacity (the right to export power onto the transmission system) of 1,455MW. Fiddler's Ferry is the only remaining operational coal-fired station in SSE's fleet. In March 2019, SSE announced the closure of Fiddler's Ferry Unit 1 (485MW).

Background

In recent years, a number of factors have weighed heavily on the viability of this asset. As national and international policies focus on promoting lower-carbon forms of electricity generation in a bid to tackle climate change, the economics of coal-fired stations have become increasingly challenged. The UK has committed to ending unabated coal-fired electricity generation by 2025, and yesterday the Government confirmed it would legislate to achieve a net zero carbon emissions target by 2050. 

The volume of electricity generated at Fiddler's Ferry is reducing year on year and the station has had limited success in Capacity Market auctions. This means that financial performance has deteriorated to unsustainable levels, with losses of around £40million in FY18/19 and projections for further losses in future years.

Over the years, Fiddler's Ferry has been a valuable asset in SSE's diverse generation portfolio; however, the station is approaching 50 years old, and despite considerable efforts to reduce costs, it is unable to compete with more efficient and modern gas and renewable plant.

SSE itself has adopted a target to reduce the carbon intensity of the electricity it generates by 50% by 2030, compared to 2018 levels.

Next Steps

SSE employs 158 people at its coal-fired operations at Fiddler's Ferry. Following collective consultation on the proposed closure it is hoped that some employees will be redeployed elsewhere in the SSE group, and some will have a continuing role in managing the decommissioning of the plant. SSE will also offer employees voluntary redundancy on enhanced terms and will seek to avoid compulsory redundancies. SSE will now commence a process of collective consultation with employees and unions with a view to closure of the units by 31 March 2020.

Stephen Wheeler, Managing Director of Thermal Energy at SSE, said:

"The proposed closure of SSE's coal-fired power station at Fiddler's Ferry is not a decision we are taking lightly. We are very aware of the impact on our employees and contractors at the station, their families and the local community. Fiddler's Ferry is SSE's last operational coal-fired station. Environmentally, coal is a major emitter of CO2, and the UK Government has committed to ending unabated coal-fired electricity generation by 2025 at the latest. Financially, Fiddler's Ferry, is loss-making and our projections show that it will continue to be so. These losses are unsustainable beyond the end of the current financial year.

"As we move towards the proposed closure, our priorities are to keep the site operating safely and effectively; and to ensure that employees have a range of options available to them for the future. The team at Fiddler's Ferry is highly skilled and dedicated, with a strong track record of performance. SSE is proud of the huge social and economic contributions the station and our employees have made to the local area and wider society. SSE is keen to ensure, where possible, that employees are redeployed across other parts of the SSE group. SSE will also offer employees voluntary redundancy on enhanced terms and will seek to avoid compulsory redundancies."