11th Dec 2015 10:58
LONDON (Alliance News) - SSE PLC Friday said it has provisionally secured agreements to supply a substantial amount of power capacity through the capacity auction, but said two of its power stations failed to secure any agreements.
The capacity auction, which is in its second year, was launched to ensure there is enough extra power generation capacity within the UK, with power generators bidding for contracts to have their sites on standby throughout the year to be used when power demand unexpectedly rises or during blackouts and similar incidents.
Although the plants will be mostly idle, companies will be paid certain amounts just for ensuring the stations are on standby and ready to go as and when required.
SSE said it has provisionally secured agreements to provide 3,150 megawatts of capacity between October 2019 and September 2020 at a price of GBP18 per kilowatt. However, SSE had bid to provide a total of 6,122 megawatts of capacity - meaning it only secured around half of what it was hoping.
The stations that failed to secure any agreements was SSE's Peterhead and Fiddlers Ferry stations, which were hoping to provide 2,972 megawatts of capacity.
"Whilst some of our plant was unsuccessful in securing an agreement this time round it doesn't affect existing operation at our sites. The capacity market is just one of multiple options available to existing plant. We will continue to analyse market conditions and opportunities for all our plant going forward," said Managing Director Martin Pibworth.
Of the 3,150 megawatts of capacity to be provided by SSE over the year-long period, 855 megawatts will be provided by the company's hydro-electric and pumped storage plant, 43 megwatts will come from "demand-side response" with the remaining 2,252 megawatts of capacity coming from its gas-fired and embedded power generating plant, it said.
Importantly, the agreements could change before they become formal, and any companies who fail to provide the extra capacity as promised will be subject to penalties.
SSE said the results of the auction "will not impact existing operations at any of SSE's operational stations, all of which will be available this winter".
National Grid PLC worked with the Department for Energy and Climate Change to conduct the auction as it operates the electricity transmission system in England and Wales.
By Joshua Warner; [email protected]; @JoshAlliance
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