Energy company SSE has said yesterday (Wednesday) it expects to close three out of four units at its Fiddler’s Ferry coal-fired power plant in Cheshire, England by 1 April, despite gaining a government capacity contract designed to incentivise back-up plants to stay online.

The 45-year old plant has been loss-making for two years and was forecast to continue losing money until 2020, mainly due to renewable energy and cheap gas prices, which have made coal-fired power plants increasingly expensive to run.

SSE has entered into consultation with staff, with a possible closure which could mean up to 213 job losses. The power plant provides two gigawatts of power to the north-west of England, enough to supply around two million homes with electricity :

“The reality is the station is ageing, its method of generating electricity is being rendered out of date and it has been and is expected to continue to be loss-making in the years ahead”, Paul Smith, managing director of the generation business at SSE said in a statement.

SSE said it would incur a penalty charge of around £33m for breaching the contract by closing the units. But it doesn’t seem to dissuade Paul Smith :

“The fact it makes more sense for SSE to contemplate making a substantial payment in lieu of the capacity agreement relating to Fiddler’s Ferry in 2018/19, demonstrates just how economically challenged Fiddler’s Ferry has become. Its losses are unsustainable.”

However, a fourth unit at the plant will remain open as it has a contract to provide power for the National Grid next winter.

Let’s remind that three months ago, the British government announced the permanent closure of all coal-fired power plants by 2025, as part of plans to lower carbon emissions from the electricity sector, and following strict EU regulation.