SSE plc

PROVISIONAL RESULT OF THE

CAPACITY AUCTION

SSE plc has provisionally secured agreements to provide a total of 4,409MW (megawatts) of de-rated electricity generation capacity from October 2018 to September 2019 at a price of £19.40/kW (kilowatt) as a result of the Capacity Market Auction process, the provisional results of which were published this morning.  The final outcome of the Auction is subject to confirmation by the Secretary of State for Energy and Climate Change. 

This means that de-rated capacity totalling 2,796MW did not secure an agreement.  This included Abernedd, Ferrybridge, Peterhead, and one unit at Fiddler's Ferry.

The capacity which has provisionally secured an agreement comprises:

·     849MW of hydro electric and pumped storage plant;

·     2,266MW of gas-fired power generating plant; and

·     1,294MW of coal-fired power generating plant.

To secure the revenue arising from the Capacity Market, providers of generating capacity will have to produce electricity when the system requires it in 2018/19; failure to do so will result in penalties being levied.

The results will not impact existing operations at Fiddler's Ferry, which is fully operational; Ferrybridge, which has recently returned both of its units to the market following a fire in July; or Peterhead, which currently holds a contract with National Grid through the Supplemental Balancing Reserve (SBR).

All three stations will therefore be available and/or generating this winter and SSE will continue to analyse market conditions and opportunities for 2015 and beyond. These include future Capacity Market auctions, future SBR tender rounds, contracts with National Grid, and business-as-usual operation in the market.

SSE's Abernedd project has been 'shovel-ready' for some time but, due to the challenging market conditions for gas plant and uncertainty about the Capacity Market, a Final Investment Decision has not been possible.  The outcome of the auction means this position hasn't changed.

Martin Pibworth, SSE's Managing Director, Wholesale, said:

"SSE has consistently argued that an effective Capacity Market will be an important additional tool in helping National Grid and the Department of Energy and Climate Change in discharging their responsibility for security of electricity supply, while supporting  progressive decarbonisation, and so the completion of the Auction is an important step towards ensuring the lights stay on in the years ahead.

"The Capacity Market, which has been designed to keeps the lights on at the lowest cost to the customer, should ensure that generators are fairly remunerated if they discharge their obligations and provide the capacity that's needed to ensure the system is able to meet the peaks in customers' requirement for electricity.

"We are pleased the majority of SSE's plant has been successful in the first Capacity Market Auction.

"Whilst some of our plant was unsuccessful in gaining a contract this time round it doesn't affect existing operation at our sites.  The Capacity Market is just one of multiple options available to existing plant. We will continue to analyse market conditions and opportunities for all our plant going forward."