* 660 megawatt Peterhead Unit Two likely to close
* Peterhead transmission capacity down to 1,180 megawatts
* Nat Grid says transmission charges unlikely only reason
(Adds National Grid comment)
LONDON, March 22 Unit Two of Britain's Peterhead
gas-fired power station is likely to close due to the charges
associated with being connected to the transmission grid, plant
owner and operator Scottish and Southern Energy (SSE.L) said on
The firm said it was dropping 344 megawatts of tranmission
rights and was reviewing the long-term future of the 660 mw Unit
Two facility. The total transmission capacity of Peterhead was
cut to 1,180 megawatts after it dropped the 344 mw of rights.
"Releasing transmission entry capacity in this way is a
pragmatic step, reflecting how the station has evolved, but it
nevertheless has been influenced by the shortcomings in the
current transmission charging arrangements," SSE Chief Executive
Ian Marchant said in a statement.
SSE said the transmission system charges power stations
different fees in different parts of Britain for being connected
to the grid. This penalised the Peterhead plant because it was
outside of southern Britain where generators are favoured by
regulators for their proximity to consumers.
National Grid sets Britain's transmission charging system
within a framework organised by the government and energy
regulator Ofgem, and is designed to stimulate investment in
generation in areas where it is most needed, the company said.
"In the south or south-east of England, that is a positive
figure, so National Grid will pay operators to provide
generation to the grid," an SSE spokesman said.
"By contrast, up in Peterhead, we have to pay to access the
grid. We consider this an unfavourable transmission charging
regime, and costs are now too great to justify keeping the extra
But energy network operator National Grid (NG.L) said ample
power supply and lower demand were also likely to figure in
SSE's decision to shut Unit Two.
"It was always expected that some older generation would
close in response to the margin of spare generation over peak
demand having increased to its highest ever level, 36 percent
this winter, and demand still being low because of the
recession," a National Grid spokesman said.
"Against this background, it seems unlikely that
transmission charges will have been the only factor in SSE's
National Grid also cited 11,600 megawatts of new
transmission agreements as an example of how charges are not a
barrier to new generation being developed in Scotland.
Peterhead power plant in Aberdeenshire in Scotland comprises
Block One, which has 1,180 megawatt generation capacity, and
Unit Two, which as 660 megawatts of capacity. Generation
capacity can exceed transmission capacity.
SSE said the review of the future of Unit Two would take
months and that the closure of Unit Two would result in 50 to 70
Block One of Peterhead is usually used as baseload
generation while Unit Two is used to top up generation during
peak demand periods, the company said.
(Reporting by Kwok W. Wan and Victoria Bryan; editing by Keiron