Future operation of thermal generation sites
SSE plc has decided to select the Limited Life Derogation (LLD) option under the Industrial Emissions Directive (IED) for its remaining capacity at its coal-fired power stations at Ferrybridge (North Yorkshire) and Uskmouth (South Wales). Under this 'opt-out' derogation, the plant (defined by the stack configuration) can run without fitting further abatement technology for a total of 17,500 hours or to the end of December 2023, whichever is the earlier.
The IED is due to come into effect from 1 January 2016 and imposes emission limits of SO2, NOx and particulates on all UK generation plant. In choosing how to respond to the Directive plant operators have a number of options, including the opportunity to identify plant to take a Limited Life Derogation (LLD). This option must be exercised by 1 January 2014.
Defra has recently confirmed that generators selecting plant for the LLD will still have the opportunity to rescind this declaration and enter into the UK's Transitional National Plan (TNP) or fully comply with the Directive should it choose to do so before 1 January 2016.
All of SSE's other qualifying UK thermal generation plant (including coal-fired Fiddlers Ferry and its gas plant) will remain in the draft TNP established by the UK Government in 2012.
SSE believes that selecting some plant for the LLD, while maintaining other similar plant within the TNP, keeps open its options for it how operates this plant in future. SSE will monitor the development of the TNP over the next two years and, as key elements are finalised, will review whether it is appropriate to also move the plant at Ferrybridge and Uskmouth into the TNP.
In addition, SSE has decided to progress with up to £15m of investment at its Peterhead power station to extend the life of the plant and allow it to operate more flexibly and efficiently in future years. The upgrade will modify high pressure and intermediate steam turbines, control systems and ancillary plant connected with Unit 1 at Peterhead. This in turn will allow the power station as a whole to deliver efficient generation output over a much wider range and down to a minimum output of 200MW. The whole programme is expected to be completed by the end of 2015.
Paul Smith, SSE's Managing Director, Generation, said:
"SSE's primary objective for its Generation business is to maintain a diverse portfolio of assets that help keep the lights on.
"There are many uncertainties surrounding the future operation of generation assets in the UK and these make it hard to take balanced decisions that minimise risk and ensure the delivery of the best value energy for customers.
"The decisions we have taken surrounding the IED and at Peterhead have therefore been influenced by SSE's well established principles covering how we operate and invest in our generation fleet over the long term. We have kept open future options for our key generation plant while ensuring we meet the requirements of the IED, minimise risk and provide a degree of clarity and direction for the teams based at these sites. These decisions also enable SSE to maintain its diversity of technology and fuel types, respond flexibly to fluctuations in customer demand and ensure we have the capacity we require to meet the needs of our customers in a cost effective way."
Background to IED
The Industrial Emissions Directive is due to come into effect from 1 January 2016 for all of the UK's existing large combustion generation plant. It imposes Emission Limit Values (ELVs) on emissions of SO2, NOx and Particulates.
As an alternative to full compliance with the ELVs the Directive includes the following options:
· Member State Transitional National Plan
This provides a transition period between the implementation date of the IED of 1 January 2016 and the end of June 2020, within which plant can move towards full compliance with the IED. After 2020 the plant must fully comply with the directive, close, or limit generation to 1500hrs per year. The UK TNP is still in development with a number of important regulatory issues still to be finalised. The draft plan has recently been rejected by the European Commission and further points of clarification have been requested. Once the plan is fully approved, it will then be consulted on and will need to be put into UK legislation. In addition, a number of other regulatory issues in relation to the operation of the TNP in the UK have still to be finalised.
· Limited Life Derogation
Under this 'opt-out' derogation, the plant (defined by the stack configuration) can run without fitting further abatement technology for 17,500 hours or to the end of December 2023, whichever is the earlier. The LLD declaration has to be made before 1 January 2014 or the option expires. However, Defra have recently confirmed that plant opting for the LLD will still have the opportunity to rescind this declaration and enter into the TNP or fully comply with the Directive should it choose to do so before 1 January 2016.
· Limited Hours Derogation
This allows plant to operate indefinitely under a 1500 hour per year (averaged over a rolling 5 years) derogation.
SSE selected to place all of its qualifying thermal generation plant within the UK TNP in May 2012. It has now decided to select the LLD option for its coal-fired power station at Ferrybridge (North Yorkshire) and Uskmouth (South Wales). SSE will monitor the development of the TNP over the next two years and, as key elements are finalised, will review whether it is appropriate to move the plant at Ferrybridge and Uskmouth back into the TNP.
