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UK's planned new gas-fired power station in Greater Manchester given government lifeline

12 July 2016

A company which wants to build a UK government-subsidised £800m gas-fired power station in Greater Manchester has been given more time to secure funding. Carlton Power plans to build a plant in Trafford which would generate enough electricity to power two million homes. The company secured an annual government contribution for the next 15 years, but missed certain deadlines for obtaining investment for the project. 

Carlton Power now has until 19 December to secure the investment.

The UK Department of Energy and Climate Change is proposing to shut all coal-fired plants by 2025, and replace them with gas-fired power stations. But the closure of capacity from coal and declines in oil and gas production have created concerns about power supply shortages in the country.

The government's capacity market scheme aims to encourage the construction of new power plants and keep existing ones going. The Trafford power station is the only new major gas-fired power plant to be offered the capacity market contract. This will be terminated in December if Carlton Power is unable to secure financial backing.

The government contribution secured by Carlton Power for the Trafford plant was worth around 30 million pounds a year for 15 years and would be paid on top of revenues generated from selling electricity.

Britain introduced the so-called capacity market to help to promote investment in the electricity sector and ensure the country has enough power during times of high demand. It pays the owners of power plants to make sure they are available over the winter months.

Plans to close coal-fired power plants in Britain by 2025, plus declines in oil and gas production, have created concerns about power supply shortages in the country. But a drop in electricity demand and prices in Britain have meant developers such as Carlton Power have struggled to find investors for new power plant projects.

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