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Longannet power station: MSPs consider future Longannet: MSPs told power station 'could close in a year'
(about 4 hours later)
The future of the huge coal-fired power station at Longannet in Fife is coming under scrutiny at Holyrood. Longannet power station will close by the end of March next year unless it secures a short-term contract with the National Grid, MSPs have heard.
Members of the Scottish Parliament's energy committee are hearing from Scottish Power, National Grid and the electricity industry regulator Ofgem. They were told the plant was competing for a contract to help maintain voltage levels in the electricity supply.
It was recently revealed the cost of connecting to the grid meant Longannet may close earlier than planned. A Holyrood committee heard that an announcement on the contract is expected by the end of this month.
MSPs want to learn more about its future and the security of Scotland's electricity supplies. And they were told Peterhead power station is also facing "economically-challenging" circumstances.
Longannet, which generates about a quarter of Scotland's electricity, is one of Europe's biggest power stations. Both plants, along with a third unnamed bidder, are currently competing for a National Grid contract to maintain voltage in the electricity supply from April 2016 to October 2017.
However, the requirement to tackle climate change by cutting carbon emissions means the power station does not have a long-term future. The contract is designed to ensure stability until the completion of projects to improve the electricity transmission system including the Western Link, a £1bn project to help carry renewable energy from Scotland to Wales and England.
Scottish Power, which runs the 40-year-old coal-burner, was understood to be trying to keep Longannet in operation until the end of the decade. National Grid said it expected to make a decision on the contract by the end of March.
But in recent weeks it has warned it may be forced to close the power station earlier than expected because of the cost of connecting it to the grid. Neil Clitheroe, chief executive of retail and generation at Longannet operator Scottish Power, told the economy, energy and tourism committee that the power station was coming under pressure from new European Union environmental legislation and carbon taxation combined with higher transmission charges to connect to the grid due to its location in Scotland.
Scottish generators, including Longannet, are said by the Scottish government to account for about 12% of the capacity connected to Britain's high-voltage electricity network but pay about 35% of the charges. He said: "We've been pretty consistent since October when we didn't enter the capacity mechanism that if something doesn't change at Longannet then the likelihood of closure is very high."
MSPs are concerned about the security of Scotland's electricity supplies if the huge power station closes early. Mr Clitheroe said that Scottish Power would have to announce about a year in advance that it was giving up the transmission rights, and in its tender to the National Grid had made it clear that "effectively that decision is now".
Longannet is also important for maintaining grid stability and would play a key role in restoring supplies in the event of widespread power cuts. Reading from a letter sent by the company, he said: "It's important to note that in event of rejection of our offers we will be forced to announce as soon as is practicable the closure of Longannet power station by the end of March 2016 and we believe that the closure will have serious consequences on security of supply and on direct and indirect employment in the local community and beyond."
Local economy 'No brinkmanship'
Conservative MSP Murdo Fraser, convenor of the energy committee at Holyrood, told BBC Scotland there were also serious concerns about the possible effects of an early Longannet closure on the local economy. He denied a suggestion from committee convener Murdo Fraser that the company was engaging in "brinkmanship" and using Longannet workers as "pawns in a game" to try and force National Grid's hand.
"Our concern of course isn't just for security of supply, that's very important," he told Good Morning Scotland. He said: "Our plan was always to get to 2020 and keep this plant going.
"Twenty percent of Scotland's electricity comes from Longannet. But our interest, of course, is in the economic future of that part of Fife: 250 quite well paid jobs [at the plant]. "We've invested £350m in the plant over the last six or seven years.
"If they're going to go, what's going to happen to the workers and what's going to happen to the local economy?" "It's not brinkmanship at all, it's just an economic reality of the situation we find ourselves in with regard to Longannet."
WWF Scotland said it hopes scrutiny at Holyrood will bring clarity to a "pretty confusing debate so far". Mike Calviou, director of transmission network service at the National Grid, said it was obliged by its licence to procure the most economic option that was in the best interests of consumers.
Director Lang Banks said: "The reality is that, thanks to the massive growth in renewable power output and interconnectors, the lights will not go out when Longannet eventually closes. He said: "That process we're expecting to finish certainly by the end of March and hopefully in the next week or so."
"However, the company and politicians owe it to the employees at Longannet and local communities to be clear about the proposed shutdown plan and the just transition to less polluting energy sources." Following the meeting, WWF Scotland director Lang Banks said: "The committee session brought some much needed clarity to what has been a pretty confusing debate until now.
Scotland's Energy Minister Fergus Ewing told BBC Scotland last month that Longannet was necessary to "meet demand". "From the evidence, it is now very clear that thanks to the massive growth in Scotland's renewable power output and planned upgrades to the transmission network, the lights will not go out when Longannet eventually closes before the end of the decade.
Following a meeting of the Scottish Energy Advisory Board, First Minister Ms Sturgeon wrote to Prime Minister David Cameron to call for an analysis of electricity capacity margins in Scotland. "Even if Longannet were to close in 2016, the National Grid is already taking steps to ensure grid stability."
The UK government's Business Secretary Vince Cable insisted there was no threat to the security of Scotland's electricity supply.