A major coal power station in Yorkshire will close at the end of September after it failed to secure a government subsidy to provide backup power next winter.
Losing out on a capacity market contract sounded the death knell for Eggborough, which supplies power to 2m homes and employs around 170 people, about 130 of whom are expected to be laid off. about 40 will be kept on for decommissioning and demolition.
“Already on the ropes, Eggborough missing out on a capacity market contract was the final straw for this once-great power station,” said Jonathan Marshall, energy analyst at the ECIU thinktank.
The plant is run by Czech power firm EPH, which bought two of British Gas owner Centrica’s large gas plants last year, and also owns an old power coal plant in Northumberland which it is converting to burn wood.
The firm said Eggborough was no longer economically viable without the support from the scheme, the government’s key insurance policy for keeping the lights on.
Adam Booth, managing director at Eggborough Power Ltd, said: “With the age of the plant and the current government’s policy that all UK coal-fired power generation must cease by 2025, Eggborough has been under threat of closure for the past few years.”
Prospect union, which has members at the plant, said it was deeply disappointed at the decision.
Eggborough has been generating electricity for more than half a century. After it shuts, there will be just six coal plants left in the UK, as Northern Ireland’s last coal plant is also due to close in May after it failed to win a contract in Ireland’s new capacity market.
The economics of coal have become increasingly untenable because of a government carbon tax and the relatively low price of gas, causing three plants to shut in 2015.
The government, which has committed to phasing out coal by 2025 to cut carbon emissions, had predicted at least one coal power station would shut this year. The fossil fuel is rapidly dwindling as a source of electricity, providing a third of the UK’s power in January as it did for January 2017.
Eggborough’s owners said they are still committed to their aspiration of building a gas plant on the site, which would be capable of powering 2m homes.
But one green group said it would be crazy to swap one fossil fuel for another. “Curtains for coal must not be a free pass to switch these plants to giant gas units,” said Dominique Doyle at environmental law firm ClientEarth.
The capacity market is crucial for the economics of coal and gas plants, and this week’s auction saw £34.7m of contracts awarded to operators for next winter.
Three quarters of those winners were for gas plants, including big-six firm SSE’s Peterhead, which is Scotland’s last fossil fuel power station. It had been threatened with closure last year after missing out on a contract but will now continue operations.
