The UK is mulling over the best course of action to close unabated coal-fired power plants by 2025 that ensures no threat to secure, reliable and affordable supplies, the Department for Business, Energy & Industrial Strategy said.
Launching a consultation on Wednesday, the BEIS said it "wants to see an orderly transition away from unabated coal generation."
BEIS said it also aims to provide "greater market certainty" for developers investing in new flexible replacement capacity, such as new gas generation, as questions over the timing of coal plant closures loom large, compounded by the short notice given to the market regarding the shutdowns.
Challenging wholesale market conditions for coal generators have already resulted in multiple plant closures in the UK this year, heightening concerns over security of supply this winter.
In August, coal-fired power output reached a record low of 0.51 TWh, the lowest since at least January 2009, according to S&P Global Platts data. The number of coal plants has dropped to eight in 2016 with total capacity of 13.9 GW, down from 17 plants in 2012.
Amid these circumstances, all coal plants are projected to have closed by 2022, well ahead of the deadline, BEIS said. The plan to phase out unabated coal from the energy mix was first announced by the UK government last November.
Hence, the consultation will explore the possible approaches for placing obligations on unabated coal plants from 2025, on how the UK could constrain coal generation before 2025, and whether it is necessary to put in place powers to suspend the proposed obligations on coal due to concerns over security of supply, BEIS said.
STEPS FOR UNABATED COAL CLOSURE
One approach for putting the closure of unabated coal into effect would be to reflect the existing regime for new coal power stations onto existing plants from 2025, BEIS said.
This means that existing stations will need to demonstrate carbon capture and storage (CCS) technology on a proportion of its capacity, undertake any necessary modification to ensure that the plant could be retrofitted with CCS in the future, and comply with the existing Emissions Performance Standard (EPS).
Another proposed approach could be to modify the existing EPS to apply a concentration-based limit on emissions per unit of generated electricity at any point in time, rather than setting an annual limit on emissions, taking effect from 2025, BEIS said.
The UK government also called upon the final date for closure as December 31, 2025, which would provide maximum flexibility to generators on whether to close or meet the proposed requirements.
It could also be appropriate to align the closure date to the Transmission Entry Capacity (TEC) year on March 31, 2025, or to be aligned with the Capacity Market year on September 30, 2025, BEIS said.
SETTING CONSTRAINTS, SECURITY OF SUPPLY
To avoid the risk of coal closures occurring together, the UK government is considering at least two broad approaches through which a constraint on coal generation could be applied: either to individual plants or across the remaining fleet of coal stations overall.
In either case, the constraint could be implemented by limiting running hours or carbon-dioxide emissions, BEIS said.
Working through all these scenarios, the UK government reaffirmed that these proposals will be put in place only if sufficient capacity will be available to compensate for the lost coal capacity.
Although the government does not intend to specify the level of replacement generation that will need to come forward to proceed with these policies, a specific level of generation, including new gas, will need to come forward in order to meet these conditions.
This level will be decided on the advice of the National Grid and will be scrutinized by the Panel of Technical Experts, taking account of the expected rate of coal closure as well as the range of other factors that influence the need for capacity, BEIS said.
"Our modelling suggests that in both scenarios, the Capacity Market will ensure that there is sufficient capacity in place and that there will be no impact on the security of electricity supply," it added.
