The future of Longannet power station will be known within weeks, amid warnings it could close unless it secures a short-term contract with the National Grid, MSPs were told yesterday.
Holyrood’s economy, energy and tourism committee also heard that Peterhead power station is facing “economically challenging” circumstances. Both plants, along with a third unnamed bidder, are competing for a National Grid contract to supply voltage from April 2016 to October 2017.
The contract is designed to ensure stability until the completion of projects including Western Link, a £1 billion investment to help to carry renewable energy from Scotland to Wales and England.
National Grid said it expected to make a decision on the contract by the end of this month.
Repeating earlier warnings of closure, Neil Clitheroe, chief executive of retail and generation at Scottish Power, told the committee that Longannet was coming under pressure from new EU environmental legislation and carbon taxation combined with higher transmission charges to connect to the grid due to its location in Scotland.
Advertisement
“We’ve been pretty consistent since October when we didn’t enter the capacity mechanism that if something doesn’t change at Longannet then the likelihood of closure is very high,” he said. Mr Clitheroe added that Scottish Power would have to announce about a year in advance that it was giving up the transmission rights and in its tender to the National Grid had made it clear that “effectively that decision is now”.
Reading from a letter sent by the company, he said: “It’s important to note that in the event of rejection of our offers we will be forced to announce as soon as is practicable the closure of Longannet power station by the end of March 2016 and we believe that the closure will have serious consequences on security of supply and on direct and indirect employment in the local community and beyond.”
He denied a suggestion from Murdo Fraser, a committee convener, that the company was engaging in “brinkmanship” and using Longannet workers as “pawns” to force National Grid’s hand.
“Our plan was always to get to 2020 and keep this plant going,” he said. “We’ve invested £350 million in the plant over the last six or seven years.
“It’s not brinkmanship at all, it’s just an economic reality of the situation we find ourselves in with regard to Longannet.”
Advertisement
Mike Calviou, director of transmission network service at the National Grid, said it was obliged by its licence to procure the most economic option in the best interests of consumers. “That process we’re expecting to finish certainly by the end of March and hopefully in the next week or so,” he said.