Drax stressed it did not accept agreements for its two coal unit at Drax Power Station or the small Combined Cycle Gas Turbine (CCGT) at Blackburn Mill and will now assess options for these assets, alongside discussions with National Grid, Ofgem and the UK Government.
A new-build CCGT at Damhead Creek and four new-build Open Cycle Gas Turbine projects participated in the auction but exited above the clearing price and did not accept agreements.
The 3,906 MW Drax Power Station at Selby, North Yorkshire, has largely been converted from coal to natural gas and wood pellets as the government sees to exit coal by 2025 at the latest. Drax’ remaining coal-fired power units have capacity contracts through to the end of September 2022.
Will Gardiner, CEO of Drax Group, conceded earlier the likelihood of the last coal-fired units at Selby running “past 2023 is extremely low”.
Coal not to pitch into T4-auction
Looking ahead, Drax now prepares for the T-4 auction, due to be held in March, which covers the delivery period from October 2023. However, Drax noted it does not expect to sign a capacity agreement for its coal-fired power assets in the T-4 auction. So, early retirement of these assets is on the cards.
Bowing to growing regulatory pressure, several other UK utilities have announced the closure of some of their left-over coal power assets, including SSE’s Fiddlers Ferry unit in Cheshire which is meant to close by March 31.
Fuel costs are another key obstacle for coal power in Britain. Falling capital costs for offshore wind and solar PV, as well as the 2013 introduction of a carbon price support levy has made it increasingly uneconomic to run coal-fired power units. Natural gas-fired units are also burdened by the carbon price, although to a lesser degree.
