UK CCGT developers keep faith with capacity market

Developers of new combined-cycle gas turbine (CCGT) projects in the UK will persist with attempts to secure funding through the government’s capacity market mechanism despite failing to earn contracts from the first two auctions held in 2014 and 2015.

Just the 2GW Trafford Power and 880MW Carrington projects were among new thermal plants awarded contracts across the two auctions, which will see generators paid to provide guaranteed availability from the start of winter 2018.

However, developers behind four major CCGT projects with a combined 5GW of capacity are optimistic over potential reforms to the capacity market that could enable them to receive contracts from the start of winter 2020.

Plans to alter the conditions of the capacity market – which focus on preventing highly-polluting embedded diesel generation from undercutting large-scale gas plants in the auction – have given CCGT developers hope they can bid in below the auction’s clearing price and earn a contract.

Independent developer Carlton Power – successful in 2014’s first auction with the Trafford project – is aiming to succeed at the third attempt with its 1.5GW Thorpe Marsh CCGT following two successive auction failures.

“Along with other gas-fired power station developers who were unsuccessful in the December 2015 capacity market auction, Carlton is likely to re-enter Thorpe Marsh into this year’s auction,” a spokesman for the developer said.

Intergen is also intending to persist with both its 645MW Spalding and 1.25GW Gateway projects following successive failures to meet the auction clearing price.

“It’s just add a year on,” a spokesman said in terms of their prospective commissioning dates. “We still need both projects to get a clearing price significantly higher than what we’ve seen so far.”

In addition, ScottishPower remains committed to its 1.8GW Damhead Creek 2 CCGT project.

Diesel power

A consultation reviewing excessive benefits accrued by diesel generation in the wider electricity market was launched last month and is expected to report with recommendations ahead of the next auction later this year for delivery at the start of winter 2020.

Escaping network transmission costs placed on conventional generation has enabled embedded diesel generators to bid into previous auctions at very low prices, thereby pushing out higher bids from larger gas-fired projects above the threshold of capacity required by the Department of Energy and Climate Change (DECC).

The UK’s energy secretary has pinpointed new gas-fired generation as crucial to replacing the country’s fleet of coal-fired plants, many of which have closed in the last 18 months bearing the brunt of punitive emissions taxes.

But a hiatus in construction over the last few years has been exacerbated by the capacity market’s low clearing prices and warnings that the UK is ill-equipped to build the capacity required to match the government’s ambition to end coal-fired generation by 2025 (see EDEM 26 January 2016).

RWE also recently scrapped long-standing plans to build a 2.4GW CCGT on the site of its old Tilbury coal-fired plant while planning consent for E.ON’s 1.2GW Drakelow CCGT expired last October. henry.evans@icis.com