Scottish & Southern Energy Plc (SSE), the U.K.’s second-largest power producer, said equipment needed to curb acid rain pollutants at two of its coal-fed power stations in northern England is too costly.
SSE’s Fiddlers Ferry and Ferrybridge power stations have until 2023 to comply with European Union limits on pollutants including nitrogen oxides. Rival EON AG is in the process of fitting selective catalytic reduction kit, known as SCR, onto its Ratcliffe plant near Nottingham to reduce the emissions blamed for acid rain.
“It’s our assumption that those two stations will shut in 2023,” Ian Marchant, chief executive officer of the Perth, Scotland-based utility said today on a conference call after publishing financial results. “Our view was that SCR was not an economic proposition and with the U.K. carbon price support mechanism, that’s been further vindicated.”
The U.K. government plans to impose a tax on carbon dioxide emissions from power stations in 2013 to raise revenue and provide an incentive to invest in low-carbon energy generation. This is at the same time that utilities are required to invest in existing plant to meet European standards under the Industrial Emissions Directive from 2015.
SSE is investigating the availability of cheaper alternative technologies to comply with the IED, Marchant said.
“If there are other technologies that appear to work that appear to be cheaper that means you can comply,” he said “We are continuing to investigate to see whether that makes sense. “We’ve got a year or two before we have to make a decision.” A 2023 closure isn’t a “foregone conclusion,” Marchant said.
The company won planning approval from U.K Department of Energy and Climate Change to fit SCR equipment at the Fiddlers Ferry site on Feb. 23, according to a government statement.
Britain’s power market is the third-most competitive in Europe, he said. The industry is dominated by six energy companies that generate and supply electricity. U.K. lawmakers proposed this week a “radical reform of the wholesale energy market” to spur power trading and increase pricing transparency for longer-dated contracts.
The U.K supply market has “six playing, who really don’t like each other,” Marchant said. “We fundamentally do not accept that between us, we have a dominant position.”
SSE does “broadly support” proposals to improve liquidity in the market, he said. “Anything that can be done to improve liquidity actually helps us manage our business on behalf of our customers.”
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