A major National Grid contract has been awarded to Peterhead Power Station.
Subscribe to our daily newsletter
Why? Free to subscribe, no paywall, daily business news digest.
The £15million deal will run from April 2016 to September 2017, and see the gas-fired station provide voltage support to the energy grid. This is the method used to ensure the system remains within statutory limits, both in daily operations and after a fault.
During this time, National Grid will be able to call upon 385 megawatts of Peterhead’s 1,180MW capacity to provide this service.
The contract was awarded to the SSE-operated station after a competitive tendering process, and National Grid said Peterhead “was best able to meet our requirements.”
Jim Smith, managing director of energy portfolio management at SSE, said: “This announcement is positive news for Peterhead.
“SSE has continually invested in the site since it opened in 1980 and we’re pleased Peterhead will continue to play an important role in ensuring National Grid can provide system stability and resilience going forward.”
As a result of this, ScottishPower has announced it will close its coal-fired station at Longannet in Fife in 2016. The company was also bidding for the voltage control contract, and said it would have to shut the station if it did not win.
Neil Clitheroe, ScottishPower retail and generation chief executive, said: “We are extremely disappointed with National Grid’s decision as ScottishPower submitted a competitive bid that reflected our commitment to protecting the immediate future of Longannet Power Station.
“As we have said previously, the decision by National Grid means that, in all likelihood, we will be forced to announce the closure of Longannet by March 2016.
“Everyone will appreciate that it is a concerning time for all our people and we will do everything in our power to manage the outcome of this process as best we can.”
The Scottish Government has announced “urgent discussions” with ScottishPower, Fife Council and trade unions on how to support Longannet’s 270 employees and the local economy. These will also look at what further action could be taken to prevent the station closing prematurely.
Scottish Energy Minister Fergus Ewing said: “First and foremost my thoughts are with the hundreds of direct employees at Longannet power station, and the many more who are dependent on the plant. Of course I welcome the news that Peterhead power station has secured a contract from National Grid, given its huge strategic importance to Scotland.
“However the news that Longannet is now likely to close prematurely is very concerning for the Scottish Government.
“We will look to engage all relevant authorities and agencies alongside Scottish Power to secure the best possible outcomes for those affected throughout the local economy and further afield. This activity will require cross-party support and close working between all of the relevant authorities.
“Of course there has been broad consensus that the electricity system in Scotland will be less resilient if Longannet closes prematurely. It is vital therefore that these discussions also explore all possible options for averting the premature closure of the site, such as possible action to address discriminatory transmission charges, whether additional National Grid contracts could be available and whether the restoration coal proposal – mentioned in the UK Budget – could help the station’s economics.”