Carlton Power receives capacity market contract termination notice


JS42338623Updated: Carlton Power has been given an extension by energy secretary Amber Rudd after receiving a termination notice for its capacity market contract for Trafford power station, a proposed new combined cycle gas turbine plant.

The termination date has been extended from 26th September to 19th December 2016 to enable the project to achieve financial close with its investors.

Reuters reported yesterday that the company was in discussions with the EMR delivery body to try and secure a deadline extension for the 1.9GW CCGT, which was awarded a 15 year capacity market contract worth £30m a year.

However, a spokesperson for the company said the extension had been agreed and that talks with investors were ongoing.

Carlton Power has signalled its struggle to secure investment in the plant for some time, telling The Telegraph last year that it would not meet its 2018 construction deadline.

Under the capacity market, generators bid for government support in return for guarantees that they will provide power when needed over winter.

The initial auctions cleared at a rate that most power companies felt was too low to support large-scale new build CCGTs. Thermal power plant economics have been rendered uncertain by intermittent renewable power and falling wholesale power prices. Carlton, however, accepted the contract.

The department of energy and climate change is now changing the auction rules in a bid to stop diesel farms driving down auction prices as it seeks to incentivise new gas generation.

National Grid yesterday underlined the importance of gas in the UK generation mix, stating that it would remain a key pillar for the foreseeable future. Presently however, investors appear unwilling to fund new build gas plants.

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