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ScottishPower confirms station will shut

Longannet to close next March after losing key contract to Peterhead

Fergus EwingLongannet power station in Fife is to close next March after a contract for handling supply variations to the National Grid was awarded to Peterhead.

Scottish Government officials will hold urgent talks with Longannet owner Scottish Power, Fife Council and the unions about running down the power station. Energy minister Fergus Ewing (pictured) will also make a statement to parliament on Wednesday.

The government confirmed that the latest moves follow National Grid’s decision to award Peterhead the transmission constraint management services contract to Peterhead.

After losing out, ScottishPower said that “in all likelihood it will be forced to close Longannet by March 2016”.

Whilst welcoming the award of the contract to SSE’s Peterhead power station, Mr Ewing said he was disappointed at the now-likely premature closure of Longannet.

Further to direct discussions this afternoon with Fife Council, Mr Ewing will look to hold urgent talks with Scottish Power, Fife Council and other stakeholders to establish arrangements for supporting employees and the local economy, as well as looking at what further action might yet be taken to avert premature closure.

He said: “First and foremost my thoughts are with the hundreds of direct employees at Longannet power station, and the many more who are dependent on the plant. Of course I welcome the news that Peterhead power station has secured a contract from National Grid, given its huge strategic importance to Scotland.

“However, the news that Longannet is now likely to close prematurely is very concerning for the Scottish Government. I will speak to the leader of Fife Council, Cllr David Ross, this afternoon to discuss a co-ordinated response.

“We will look to engage all relevant authorities and agencies alongside ScottishPower to secure the best possible outcomes for those affected throughout the local economy and further afield. This activity will require cross-party support and close working between all of the relevant authorities.

“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.”

Transmission constraints – Ofgem explains:

The Energy Act 2010 gave powers to the Government to introduce a licence condition to limit behaviour by electricity generators during periods when there is insufficient capacity to transmit electricity from where it is generated to where the demand is.

In such circumstances, known as transmission constraints, the System Operator will need to take actions to ensure that the level of electricity supplied equals the level of electricity demanded. These actions are generally to pay generators to either increase their generation, or to accept a payment from (or sometimes pay) generators to reduce their generation.

During transmission constraints, there are often only a limited number of options available to the System Operator, which can sometimes lead to very high costs to balance the system. The licence condition prohibits generators from deriving an excessive benefit from electricity generation in relation to a period of transmission constraint. This may occur either where the generator artificially creates or exacerbates a transmission constraint, or where the generator derives an excessive financial benefit from the System Operator in return for reducing their generation.

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