Eggborough Power Station to close, biomass not an option

A 2,000-MW, coal-fired power plant in North Yorkshire, England, announced it will stop producing power at the end of March and close, rather than converting to biomass as once proposed.

In the notice, the company said it would require funding of £200 million over the next three years to continue generating power, which it described as “financially unsustainable for the 53-year-old plant.”

At one point, plans were to convert the operation to biomass fuel, as England’s Drax Power has done. In late 2013, the U.K. Department of Energy and Climate Change announced the government had sent draft investment contracts to 16 renewable energy projects that progressed to the next stage of the Final Investment Decision Enabling for Renewables process, which provided subsidies to plants to enable projects such as renewable conversions. Eggborough was on that list, but was removed from it in mid-December when it was cut to 10 projects that were identified as “provisionally affordable” under budget caps.

As a result, the coal-fired plant’s proposed conversion to biomass was deemed as unlikely to move forward, and at the time, the plant was projected to cease operations by the end of 2015.

Neil O’Hara, chief executive of Eggborough Power Ltd., said the utility believes Eggborough Power could have a significant part to play in ensuring security of supply in the U.K. electricity market, particularly while there remains great uncertainty around new-build gas-fired generation.  Reasons for the plant’s unsustainable financial position has arisen as a result of a combination of market and regulatory conditions, included continued fall in power prices driven by the decline in commodity prices,   combined with continued high carbon tax, preventing Eggborough from being able to cover future operating costs.  “This fall in power prices has continued in spite of a number of plant closures and tightening capacity margins,” the company noted.

Recent changes to the bidding rules for the government’s Supplemental Balancing Reserve, its Capacity Market Rules, and to the renewable subsidies available for biomass conversion all contributed to the plant’s shut down.