Theresa May confirmed the government’s goal to close coal-fired power stations by 2025, which they intend to achieve through a new emissions performance standard. Coal plants will be required to limit the amount of carbon they emit to 450g CO2 per kW hour to remain open after 2025. Operators will only be able to meet this standard by retrofitting carbon capture and storage (CCS) equipment, which the government believes will be inefficient and cost-prohibitive for the majority of plants or by co-firing with biomass.
They also expect that coal power stations won’t be able to retrofit CCS equipment in time for the 2025 deadline. Unabated plants will be unable to bid into the four and one year ahead (known as T-4 and T-1 respectively) capacity market auctions for 2025/26.
Three plants shut in 2016 – Longannet, Ferrybridge C and Rugeley – as a result of increasingly stringent EU pollution standards and the increase in the carbon tax. There are now only eight plants remaining in the UK, and power generation from coal has fallen by over 80% since 2012. The government has predicted that a major plant will close this year, with another closing in 2019.
In the event of an emergency shortfall in electricity supplies, the government has the power to suspend the phase-out. However, ministers have said that the supply gap created by the closure of coal plants can be filled by extending the life of old gas power stations, so they’re confident that they will not need to use these emergency powers.
David Oliver, energy consultant at Inenco, said:
“While the new emissions performance standard could persuade some plants to consider extending their life by co-firing with biomass or installing CCS equipment, it’s likely that most plants will be resigned to closure, particularly as coal has been expensive compared with gas in recent years.
“The results of the T-4 capacity market auction will be revealing. If all of the remaining coal plants win contracts, then we’ll know that they will still be operating in 2022. However, it’s possible that some could decide to close before the 2025 deadline and if plants don’t bid into the capacity market auction at the end of January, this could be a sign that they intend to close early.
“We understand that the phase out of coal-fired plants is necessary as we move towards a low-carbon future, and it’s a positive movement for decarbonisation that the government is rewarding greener alternatives in the capacity market. As we become more reliant on renewables, demand side response (DSR), will be critical to balancing the grid – so we’re excited about the opportunity for business consumers to benefit significantly from participating in DSR schemes.”