In the third of a series of deals to provide more standby coal power if needed, the National Grid electricity system operator (NGESO) is working to finalize a deal with Uniper to keep all operations open at Ratcliffe -on-Soar through the winter. In May, business secretary Kwasi Kwarteng wrote to NGESO asking executives to work with Uniper and fellow coal-fired power station owners Drax and EDF to slow their plans to shut down after Russia’s invasion of Ukraine which disrupted energy markets. Uniper was due to decommission one of the 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 agreement, NGESO is expected to pay the company a fee to delay the decommissioning so that all three units can be activated if needed. Uniper will also be reimbursed for costs incurred, including carbon purchases, with any additional charges ultimately fed into 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 goal is now at risk as energy ministers and regulators struggle to ensure security of supply. Agreements have already been agreed with Drax and EDF to extend the life of two units from October to the end of March. Drax, which operates a power plant in Yorkshire, said it had agreed to supply up to 400,000 tonnes of extra coal, which with current reserves is enough to generate 1 terawatt of electricity. The plant will only operate when it is given a relevant order by the National Grid. EDF agreed in June to extend the life of its West Burton A coal plant in Nottinghamshire by six months. It maintains 200 workers to ensure that 400 MW is available as and when needed from one unit, with a second unit as a backup. NGESO said this month it expected the “upfront cost” of the series of deals to be “£220m to £420m, subject to the supply and use of coal”. According to the US Energy Information Administration, Russia’s natural gas exports via pipelines to the EU and the UK fell by almost 40% in the first seven months of 2022, compared to the same period last year. As Russia has dramatically reduced its natural gas exports, coal prices have risen. Global carbon consumption is expected to rise to record levels reached 10 years ago. The UK is not dependent on Russian gas, but is a major importer of natural gas from Norway and electricity from France. There is a risk that these countries will reduce exports to Britain this winter as they try to meet their own needs. The UK government has insisted that access to North Sea natural gas reserves and LNG imports means “households, businesses and industry can be confident of getting the electricity and natural gas they need”. . The share 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 coal plants and that the deals were a contingency plan. “It’s not the basic assumption that they will be activated,” said one. Subscribe to Business Today Get ready for the business day – we’ll point you to all the business news and analysis you need every morning Privacy Notice: Newsletters may contain information about charities, online advertising and content sponsored by external parties. For more information, see our Privacy Policy. We use Google reCaptcha to protect our website and Google’s Privacy Policy and Terms of Service apply. Earlier this month it emerged that official analysis suggested there could be four days of power outages for consumers and businesses in January under a “reasonable worst-case scenario”. Robert Buckley, head of relationship development at energy consultancy Cornwall Insight, said the coal deals boosted Britain’s short-term security of supply. “On the margins coal could play a significant role 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 can be very important,” he said. Coal units can be fired with about 12 hours notice. Mr Buckley said the return to polluting coal power was a “trade-off” between making progress on tackling the climate crisis and ensuring energy supplies remain stable this winter. “There are compromises everywhere. The big trade-off that Europe made wrong was to rely on Russian gas,” he added. The price of carbon in the EU’s emissions trading system has hit record highs in recent weeks as coal plants, particularly in Germany, have become more important in the energy mix. A Uniper spokesman 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, due to close in September 2022, available if needed during the winter. We cannot comment further at this time.” A government spokesman said: “While there is no shortage of supply either in the immediate or long term, we may need to keep other remaining coal-fired power stations available to provide additional back-up electricity next winter if needed in light of Russian illegal invasion of Ukraine. “However, it remains our firm commitment to end the use of coal power by October 2024.” A NGESO spokesman said it was conducting negotiations as requested by the government.
