SSE secures value in derated capacity agreements

The FTSE 100 energy firm said the auction cleared at a price of £8.40/kW, with the provisional results published today and subject to confirmation by the Secretary of State for Business, Energy and Industrial Strategy.

It said the SSE capacity which had provisionally secured an agreement comprised 806MW of hydro electric and pumped storage plant, and 3,371MW of gas-fired and embedded power generating plant.

The total value secured by SSE was around £35.1m.

“The revenue will be received on a prorated basis throughout the delivery year,” the company’s board explained in its statement.

“To secure the revenue arising from the Capacity Market, providers of capacity must produce electricity or reduce demand when the system requires it in 2021/22; failure to do so will result in penalties being levied.”

2,811MW of SSE's de-rated capacity, which prequalified for the auction, did not secure an agreement, the board explained.

That included SSE's proposed new build CCGT, Keadby 2, with a 767MW de-rated capacity; and SSE's coal-fired power station Fiddler's Ferry, with a 1,743MW de-rated capacity.

“The result has no immediate impact on the station as three of the four units at Fiddler's Ferry have capacity obligations in the 2017/18 and 2018/19 delivery years,” the board said.

“In light of the latest auction results, SSE will consult with major stakeholders and make a final decision about the future of Fiddler's Ferry beyond the station's capacity contract commitments, which run to September 2019.”

SSE said its wholesale business priorities in 2017/18 and beyond continued to include a focus on maintaining and operating its generation portfolio efficiently and reliably, while analysing market conditions and opportunities to create value.