The effort to prevent electricity blackouts this winter is expected to delay the closure of part of a coal-fired power station in Nottinghamshire, with the plant’s German owner nearing agreement with the UK authorities.
In the third in a series of deals to have more coal power on standby if needed, National Grid’s electricity system operator (NGESO) is working towards finalising an agreement with Uniper to keep all of the operations at the Ratcliffe-on-Soar site open through the winter.
In May, the business secretary, Kwasi Kwarteng, wrote to NGESO asking executives to work with Uniper and fellow owners of coal-power stations Drax and EDF to slow their closure plans after Russia’s invasion of Ukraine shook the energy markets.
Uniper had been due to decommission one of its 500-megawatt units at the Nottinghamshire plant at the end of September, two years before closing the remaining three units at the site.
Under the deal, NGESO is expected to pay the company a fee to delay the decommissioning so all three units can be called on if needed. Uniper will also be compensated for costs incurred, including coal purchases, with any additional charges eventually being fed through to consumers’ energy bills.
The UK government has committed to ending the use of coal power in Great Britain by October 2024, a year earlier than originally planned. But that target is now at risk as ministers and power operators race to ensure security of supply.
Deals with Drax and EDF to extend the life of two units each from October to the end of March have already been agreed.
Drax, which operates a power plant in Yorkshire, said it had agreed to source up to 400,000 tonnes of additional coal which, with current stocks, is enough for 1 terawatt hour of electricity generation. The plant will only operate when instructed to do so by National Grid.
EDF agreed in June to extend the life of its West Burton A coal plant in Nottinghamshire by six months. It is retaining 200 workers to ensure 400 MW is available as and when needed from one unit, with a second unit as backup.
NGESO said this month that it expected the “upfront cost” of the series of deals to be “£220m to £420m, subject to the procurement and use of the coal”.
According to the US Energy Information Administration, Russia’s natural gas exports by pipeline to the EU and the UK fell by almost 40% during the first seven months of 2022, compared with the same period last year.
As Russia has dramatically reduced its gas exports, coal prices have surged. Global consumption of coal is expected to increase to the record levels reached 10 years ago.
The UK is not reliant on Russian gas, but it is a big importer of gas from Norway and electricity from France. There is a danger those countries may reduce exports to Britain this winter as they try to meet their own needs.
The UK government has insisted that access to North Sea gas reserves and liquified natural gas imports means “households, businesses and industry can be confident they will get the electricity and gas they need”.
The proportion of coal in the national electricity generation mix has fallen from 26% in 2010 to 7% in 2020, according to a recent government review. Ministers say the new deals will not derail the target of ending coal use by autumn 2024.
Sources close to the situation said officials hoped not to have to turn to the coal plants and that the deals were a contingency plan. “It is not the base case assumption that they will be turned on,” said one.
Earlier this month it emerged that official analysis suggested there could be four days of blackouts for consumers and businesses in January under a “reasonable worst case scenario”.
Robert Buckley, the head of relationship development at the energy consultancy Cornwall Insight, said the coal deals boosted Britain’s short-term security of supply. “At the margins coal could play a significant part this winter and maybe even next. The ability of coal power to ramp up quickly when the wind drops or it suddenly gets very cold could be very important,” he said. Coal plants can be fired up with about 12 hours notice.
Buckley said a return to polluting coal power was a “trade off” between progress in tackling the climate crisis and ensuring energy supplies continue smoothly this winter. “There are trade offs everywhere. The big trade off that Europe got wrong was relying on Russian gas,” he added.
The price of carbon in the EU’s emissions trading scheme have hit record highs in recent weeks as coal plants, notably in Germany, have taken on greater significance in the energy mix.
A Uniper spokesperson said the company was “continuing discussions with National Grid ESO in line with the government’s request to keep our unit at Ratcliffe-on-Soar power station, which is due to close in September 2022, available if needed during the winter. We cannot comment further at this time.”
A government spokesperson said: “While there is no shortage of supply for both the immediate and long term, we may need to keep other remaining coal-fired power stations available to provide additional back up electricity this coming winter if needed, in light of Russia’s illegal invasion of Ukraine.
“However, it remains our firm commitment to end the use of coal power by October 2024.”
A NGESO spokesperson said it was conducting negotiations as requested by the government.
• This article was amended on 30 August 2022 to refer to 1 terrawatt hour, rather than 1 terrawatt, of electricity generation.
