Gas-fired Generation Technology Investment
Energy provider SSE plc has announced plans for capital and investment expenditure of £6 billion across the UK and Ireland over the next five years.
Upgrading electricity networks in the north of Scotland and central southern England and developing new sources of renewable energy, including offshore wind in the UK, are expected to account for around £4 billion of the £6 billion.
Included with the £6 billion is the £350 million which SSE has decided to invest in the construction of a new combined cycle gas turbine (CCGT) power station at Keadby in North Lincolnshire.
SSE and Siemens have partnered to introduce this first-of-a-kind, high efficiency gas-fired generation technology to the UK. Works will begin in Spring 2018 on an 840MW CCGT at Keadby 2. Once completed, the station will be the most efficient CCGT on the system (in the region of 63%), enabling the UK to move away from coal in the 2020s and to integrate more renewables into the power grid.
This partnership places Keadby 2 in a unique commercial position, with Siemens and SSE collaborating to deliver this project at the most competitive cost. Siemens will provide its 9000HL technology and will manage technical, construction risk until the plant is handed over to SSE as well as provide appropriate performance guarantees. SSE will invest around £350 million in the development and construction of the project, with a substantial proportion of its financial exposure deferred until the plant is operational.
SSE continues to believe the UK’s capacity market is the right mechanism to ensure the GB electricity system remains secure at the lowest cost to consumers. Alongside wholesale market and ancillary services revenues, capacity market payments remain an important aspect of the economics of Keadby 2, and SSE intends to participate in future auctions to secure a capacity market agreement.
The decision to invest in Keadby 2, with its high thermal efficiency, is compatible with SSE’s new ambition to achieve a further 50% reduction in the carbon intensity of electricity it generates, to around 150g/kWh. Keadby 2 is also expected to reduce carbon emissions for the overall GB electricity system by reducing the need for older, lower efficiency CCGTs as well as single cycle thermal generators, all of which produce higher carbon emissions when running.
The decision to proceed with Keadby 2 demonstrates SSE’s ongoing commitment to the North Lincolnshire region. SSE already operates a 735MW CCGT at Keadby, which employs 52 people as well as the adjacent £98m Keadby Wind Farm, through which SSE expects to deliver a total of £4.3 million in community benefit funds. Keadby 2 will continue to bring benefits to the regional economy through creation of jobs during the construction phase and the longer-term operation of the station.
Martin Pibworth, SSE’s Wholesale Director, said: “SSE is very pleased to have this unique opportunity now to be partner with Siemens to build a new state-of-the-art gas-fired power station at Keadby 2. Its highly efficient technology, not previously seen in the UK, will provide firm, reliable power from the early 2020s at half the carbon emissions of the coal generation it is replacing. New CCGT complements SSE’s ambitions to develop more offshore and onshore wind as CCGTs remain well-placed to provide flexible, grid-scale back up to complement the large volumes of renewables the UK needs to meet its low carbon targets.”
Willi Meixner, CEO Power and Gas Division, Siemens AG, said: “Siemens is delighted to be selected by SSE to work in partnership in the deployment of our new 50hz 9000HL gas turbine technology which will allow SSE to compete in the UK energy market. Siemens has invested significantly in the development and deployment of this new engine, which is a combination of proven and new technologies to offer leading efficiencies to global power plant operators.”
Energy and Clean Growth Minister Claire Perry said: “Today’s announcement by SSE to invest almost £6bn into the UK and build a state of the art power station in North Lincolnshire is a testament to the success of our power sector in attracting international investment and delivering a diverse and increasingly lower carbon mix.
“Our modern Industrial Strategy sets out a long-term plan to decarbonise the power sector adding to security and prosperity while cutting consumer bills and pollution.”