Davey holds out hope for Eggborough power station’s future

The Liberal Democrat Minister said the short-term prospects for coal-fired power stations such as Eggborough in North Yorkshire are “actually quite good”, and that he “expects” the plant to remain open – despite the closure plans it announced in December.

Mr Davey denied claims from Eggborough bosses that his decision not to support its £1bn plan to switch from burning coal to wood and biomass was a “subjective” step taken because he personally prefers wind farms to traditional power stations. The reality, the Energy Secretary said, is that the Government simply does not have enough money to support every green energy project that comes forward.

“There is a huge amount of investment that we’re supporting in Yorkshire in low carbon (energy),” he told the Yorkshire Post, citing the decision to back a similar plan at Drax power station to convert from coal-firing to biomass, as well as Government funding for carbon capture and storage research projects in the region.

“Eggborough has gone through our qualifying criteria into the last 16 – we started off with 57 projects coming forward, and we whittled it down to 16.

“When we got down to the last 16, we had to rank them in affordability. We can afford 10.

“Those criteria are objective criteria – there haven’t been ‘Ministerial decisions’. It’s gone through the objective criteria that we make our decisions by. So Eggborough is in the last 16, (but) it’s not in the 10 ranked as affordable within our spending envelope.”

Mr Davey said he did not believe the plant needs to close next year, as its owners have claimed.

“I hope that if they don’t end up getting a (Government) contract, that they continue to produce, because we actually think the economics of coal plants at the moment – in the short-term at least – are quite good,” he said. “And so we would expect them to continue and to contribute to Britain’s energy supply.”

Eggborough announced its closure plans last December, following the Government’s decision not to back its biomass conversion scheme. Bosses say they will shut down its first unit later this year, with the entire plant ceasing operation by the end of 2015.

Eggborough chief operating officer Paul Tomlinson said yesterday the Government had “changed the rules” regarding which green energy schemes could qualify for funding just a week before it made its final decision on December 19.

He warned of the impact such “11th-hour” decisions would have on attracting investment into energy projects in the future.

“They announced the new rules the week before,” he said. “It was news to us, and it gives international investors a real wobble – they think ‘why would we invest, if they can change the rules at the 11th hour?’ David Cameron goes off to China trying to attract investors into this country (last November) – and then a month later one of his departments does this.

“The whole process seems to be a mess – it’s not transparent and it doesn’t seem objective. It seems a subjective view that favours one technology over the other.”

Mr Tomlinson said Eggborough’s £1bn conversion project had been ready to begin last month had it been given the green light.

He said: “We’ve got our international supply chain established; we’ve got two ports ready to start construction to receive (the biomass fuel) on the east coast; we’ve got GB rail freight contracted to move all our fuel – they’ve bought six locomotives and they’ve got plans to buy 180 wagons.

“We’ve got an engineering contract for about £500m to convert the site that was due to start on Jan 6 of this year. We were all ready to go.”

The Eggborough boss said the impact on Britain’s energy security of Eggborough’s closure would be significant, with the UK grid currently at near-capacity.

“The storms we’ve just had really hit it home – there have been 100,00 homes without power because of the wind,” he said. “We’re going into next winter with two per cent spare capacity. If Eggborough comes off the bars we will be at minus two per cent. We supply 1.6m homes.”