Capacity Market 2015: eight new-build gas-fired plants and two interconnectors rejected

 

Eight large new-build gas projects failed to qualify for the upcoming Capacity Market auction, leaving Trafford (which won a contract last year) and potentially ESB’s Carrington (under constructon, and prequalified for the auction) the only large new-build gas plant likely to be supported by the mechanism. Companies have until 2 October to appeal the decision on prequalification (update: companies have until 2 October to resubmit data – some parts of the prequalification process were described as “obscure” and “confusing”. An updated list will be published on 9 October and New Power understands that several of the initially rejected units expect to qualify. A further “Tier 2″ appeal window opens on 9 October and closes on 16 October, according to the original timetable.)

The results come just days after EDF Energy was granted development consent for a new gas-fired power plant at Sutton Bridge in ­Lincolnshire – a project in the pipeline since 2005 (and not entered into the CM).

The results highlight the lack of progress in bringing new gas-fired plant into operation. EDF’s permission  brings to 20 the number of gas-fired projects with ­planning consent in Great Britain that have not entered the construction phase, according to New Power’s database. Some have had planning permission for years and in at least one case it has lapsed (subscribers, login to search the database), despite the fact that the GB supply/demand margin has been narrowing over the past half-decade.

While most of the projects in New Power’s list of plants with “approved” development consent are CCGTs, two open cycle gas turbines (OCGTs) have also joined the list Progress Power and Hirwaun. These projects are among those failing to prequalify.
In some projects there has been ­progress over the past year. RWE Npower was awarded development consent in August for a gas pipeline required to take forward its plant at ­Willington, but the power plant does not have transmission capacity booked and did not enter CM prequalification. Trafford Power won a CM contract for delivery in 2018 in the first auction, although the project has not yet moved forward significantly. Scottish Power, meanwhile, has preferred to reopen planning consent at Damhead Creek to accommodate a larger project, rather than ­taking forward the project as consented.
New Power’s database includes some projects where progress has all but ceased. SSE says development of Abernedd is on hold, and it does not plan to make an investment decision on a new plant at Keadby until next year. Centrica has mothballed the King’s Lynn site. At Barking, the closure of an existing plant due to poor market conditions has put in severe doubt SSE’s plan to build a new combined cycle gas turbine (CCGT) at the site.

Despite public concerns over supply margins, some projects have already seen planning permission lapse – E.On’s proposed CCGT at Drakelow in Essex is one example. Although some projects are clearly on hold, altogether consented gas-fired projects have around 15GW of transmission exit capacity (TEC) booked to take up between now and 2020, and although some booked ­capacity has been delayed, little has been cancelled or allowed to lapse. Some projects have delayed transmission capacity. Intergen has put back the booking for its Gateway project by a year to 2019. ESB  put back booked capacity at a second project, Knottingley, until 2020.

Without the capacity market bringing new plant online, gas capacity coming onto the market is more likely to be old plant returning from mothballs than new plant starting up, such as SSE, which said it may reopen an existing station at Keadby.
One interconnector prequalified – National Grid’s IFA link with France. Two others -  Britned (in operation) and Nemo (new-build) failed to prequalify.

Other new-build plants that failed to qualify included a new multifuel plant at Ferrybridge. Large plants in operation that failed to qualify included Immingham, a unit at Baglan, the existing Damhead Creek plant, and several hydro projects.

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