THE future of Longannet power station is hanging in the balance after operator ScottishPower said it would not enter it into a key government auction to supply the country with electricity throughout winter.
The energy firm blamed a row over costly transmission charges for plants located far away from the south of England.
The company said “disproportionate transmission charging penalties” applicable to the Fife facility – the second-largest coal power station in the UK and the biggest in Scotland – made it impossible to justify entering the auction for supplying Britain’s electricity capacity for winter 2018-19.
If Longannet does not take part in the auction, industry insiders warned Scottish customers could see a detrimental effect to the reliability of their electricity supply, due to a lack of ability to regulate voltage.
The plant, which has been in operation for more than 40 years and operates as a back-up for electricity generated from other sources such as renewables, would also lie dormant – putting 260 jobs at risk.
Power stations located furthest away from population centres in the south of England have to pay more than those located south of the Border, with some in England receiving a fee to stay connected to the grid.
ScottishPower said the £40 million-a-year “penalty” charge based on Longannet’s geographical location, meant it was not viable to take part in the process, newly designed to ensure the UK has enough electricity generation to cover expected demand during cold periods.
But the firm insisted it would do everything it can to “keep Longannet operational for as long as possible”.
A spokesman for Unite, which represents energy workers, said he feared for staff at Longannet.
“Longannet supports skilled, quality jobs both directly and across the supply chains,” said the spokesman. “However, this highlights once again the fundamental problems in our existing energy market policy which seem increasingly detrimental to both the security of jobs and the cost to the consumer.”
Energy minister Fergus Ewing said he “strongly encouraged” regulator Ofgem to heed ScottishPower’s warning.
“This decision is a direct consequence of the transmission charging regime that unfairly penalises Scottish energy generators, which account for around 12 per cent of capacity connected to Britain’s high-voltage electricity network but pay around 35 per cent of the charges,” he said.
Neil Clitheroe, chief executive of energy retail and generation at ScottishPower, said: “We do not want to close Longannet, and I would stress that there are no plans to do so.
“However, to avoid closure within the coming years, changes to the plant’s financial situation must be achieved.
“The current market conditions, predominantly the transmission charging rules, mean we simply can’t justify entering Longannet into a process which is four years away and will then only offer one year of certainty.”
The plant generates enough electricity for over two million homes a year and also regulates network voltage in Scotland.
The National Grid admitted consumers could see an effect to the “quality” of their supply but said the gap would be plugged by other UK power stations.