Bosses at the massive Longannet coal-fired power station in Fife ended months of speculation about its future yesterday after losing a key National Grid contract.
Energy minister Fergus Ewing last night held emergency talks with local politicians and operator ScottishPower aimed at averting the early closure of the 2.4 gigawatt plant on the banks of the Forth.
Union leaders branded the news “catastrophic” and called on politicians to step in to save Longannet from the axe after rival SSE’s Peterhead power station was handed a £15 million deal to maintain electricity voltage levels.
There are now fears over Scotland’s future energy security and its growing reliance on imported electricity from England and overseas to keep the lights on. The troubled coal plant’s days were already numbered because it is a big polluter. But instead of lasting until around 2020, the loss yesterday of the short-term contract from the National Grid from April 2016 to September 2017 means it will now close inside a year.
Neil Clitheroe, chief executive of ScottishPower retail and generation, said he was “extremely disappointed” that National Grid had selected Peterhead.
“Everyone will appreciate that it is a concerning time for all our people and we will do everything in our power to manage the outcome of this process as best we can. In all likelihood, we will be forced to announce the closure of Longannet by March 2016,” he said.
However, in Peterhead last night the mood was more upbeat, with SSE saying the National Grid announcement was “positive news” for the area.
Longannet has been a key part of Scotland’s industrial landscape since it opened in 1973. It employs about 270 people directly, but it is feared about 1,000 jobs, including contractors, will be lost in the wider supply chain. On full power, the plant has the capacity to power more than two million homes.
The plant has been under pressure from new European Union environmental legislation and carbon taxation, combined with higher transmission charges to connect to the grid due to its location in Scotland.
Mr Ewing held talks with council chiefs last night and further discussions will be held with the company and unions about Longannet’s future.
The minister will also make a statement to MSPs at Holyrood on the issue today.
“The news that Longannet is now likely to close prematurely is very concerning,” he said.
“Of course there has been broad consensus that the electricity system in Scotland will be less resilient if Longannet closes prematurely.
“It is vital, therefore, that these discussions also explore all possible options for averting the premature closure of the site, such as possible action to address discriminatory transmission charges, whether additional National Grid contracts could be available and whether the restoration coal proposal – mentioned in the UK Budget – could help the station’s economics.”
The UK’s transmission charging regime is designed to encourage power companies to invest in generation capacity close to large centres of population in central and southern England.
At present, it costs about £40m a year to keep Longannet connected to the National Grid, while an equivalent power station in the south of England would receive a payment of £4m. The SNP has been calling for this system to be changed.
ScottishPower said this “negatively impacts the future of the station.”
Mr Clitheroe said: “The current transmission charging regime is a major barrier to any future investment in flexible thermal generation in Scotland.”
ScottishPower already has planning permission to develop a gas-fired power station at the site of the former coal-fired plant in Cockenzie, East Lothian. It is understood it would look to do something similar at Longannet, but the “prohibitive” transmission charging system effectively rules out both projects.
Prospect, one of the unions that will meet Mr Ewing on Thursday, called on politicians to reverse the “catastrophic decision”.
Speaking after a meeting with ScottishPower, Prospect negotiations officer Richard Hardy said closure would “threaten over 1,000 highly-skilled jobs within the power station and the supply chain”.
He added: “This decision raises two major concerns for our members – the impact on their jobs and the west Fife economy and the implications for security of supply.”
SSE, meanwhile, said the National Grid announcement had been “positive news” for Peterhead.
Jim Smith, managing director of energy portfolio management for the company, said: “SSE has continually invested in the site since it opened in 1980 and we’re pleased Peterhead will continue to play an important role in ensuring National Grid can provide system stability and resilience.”
Scottish Conservative energy spokesman Murdo Fraser said the closure of Longannet would be a “serious blow” for the workforce and Scotland’s wider economy.
“It illustrates once again why the Scottish Government has to change tack on energy policy,” he said.
“The SNP is anti-fracking, anti-nuclear and obsessed with developing intermittent wind power.
“This approach will have serious issues in relation to security of supply.”
Labour energy spokesman Tom Greatrex said: “We are now reliant on the rest of the UK for power for at least part of one day in every five, when demand is high and there is low renewable generation.”
Gina Hanrahan, climate and energy policy officer at WWF Scotland, said Longannet’s closure was an “important step” in Scotland’s transition to “a clean energy future”.
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