Secretary of State Amber Rudd has agreed a three-month extension to the termination date for Carlton Power’s Capacity Market contract in respect of a planned CCGT at Trafford in Manchester. The date has been extended from 26 September to 19 December 2016 to enable the project to achieve financial close with its investors, the company said.
New-build plants are required to show at ‘financial commitment’ date that they have financing in place for construction. According to the EMR Delivery Body’s CM register Carlton Power’s financial commitment date was 2 July, but in a 1 July update the commitment was still outstanding.
In a statement, Carlton Power admitted that earlier this week it received a Termination Notice advising that the Capacity Agreements secured in the 2014 Capacity Auction will terminate on 26 September.
But the company insisted: “Although a Termination Notice has been received, Carlton Power’s negotiations with investors are ongoing and given Trafford’s importance to DECC (new gas generation capacity/security of supply, regional investment, the only new build CCGT project to have been awarded a contract under the two CM auctions run to date), are in talks with the Department and the Delivery Body about the project’s financing.
“All parties are working hard to achieve Trafford’s financial close in accordance with the rules and regulations governing the Capacity Market and which will enable the start of construction and a start in the delivery of DECC’s gas generation strategy. Carlton are confident that it will achieve a successful outcome with Trafford, which should see the plant entering operation in 2019. Assuming that negotiations proceed as everyone hopes, the FID is targeted for later this year.”
Contract termination would incur a penalty of £5000/MW.
Trafford is the only new-build large gas generating plant to win a Capacity Market contract in the government’s inaugural auction. It won a 15-year contract at £19.40 per MW but observers have been sceptical that a new plant could go ahead at that price.
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