240 jobs at risk as Eggborough Power Station may close in March 2016

Eggborough Power Limited (EPL) has announced that Eggborough Power Station may cease generating power at the end of March 2016, with the potential loss of approximately 240 jobs.

However, this figure depends on the outcome of a staff consultation exercise and further talks with government bodies.

£200m of funding is required over the next three years for the coal-fired power station to continue generating power, but this is financially unsustainable for the 53-year-old plant.

EPL has therefore decided to commence consultation with employees and their representatives on the potential cessation of power generation, which could lead to redundancies.

A number of roles may be required to support decommissioning and future opportunities for the business beyond March 2016.

Neil O’Hara, chief executive of Eggborough Power Ltd, said: “We are deeply saddened at the prospect of potentially ceasing generation at Eggborough Power Station and believe that Eggborough Power could have a significant part to play in ensuring security of supply in the UK electricity market, particularly while there remains great uncertainty around new-build gas-fired generation.

“We intend to conduct a thorough consultation process with our employees and their representatives while we continue to consider all options available to us, including seeking to engage with government bodies. Our priority is to support our staff during this difficult time.”

The 2000MW coal-fired power station is able to power 2 million homes – around 4% of UK homes, and is forecast to contribute through carbon tax alone (UK carbon price support mechanism) over £250m to the UK economy, over the next three years.

The station has unsuccessfully attempted to gain support from the government to convert to biomass. EPL was acquired by Central European energy group Energetický a Průmyslový Holding (EPH), in November 2014 as part of a UK acquisition strategy.

EPL’s unsustainable financial position has arisen as a result of a combination of market and regulatory conditions, including:

• A continued fall in power prices driven by the decline in commodity prices, combined with continued high carbon tax, means that Eggborough is unable to cover its future operating costs. This fall in power prices has continued in spite of a number of plant closures and tightening capacity margins.
• Recent changes to the bidding rules for the government’s Supplemental Balancing Reserve (SBR) which meant that this was no longer a viable option for Eggborough to recover some of its operational costs.
• Recent changes to Capacity Market rules which mean that this no longer represents a viable option to support life extension investment.
• Recent changes to the renewable subsidies available for biomass conversion which mean that this is no longer a viable option for Eggborough.
• Uncertainty regarding Eggborough’s environmental permits from 1st January 2016 which could place greater constraint on emissions, impact operational flexibility and reduce profitability.

Mr O’Hara added: “The decision to commence consultation has not been taken lightly. Eggborough has a proud history of generation and a dedicated and skilled workforce. We will work through the consultation with employee representatives and provide support to employees throughout this process.”

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