London — Calon Energy directors have retained control of two 850-MW combined cycle gas turbine plants in the UK placed into administration last year, with new funding deemed sufficient to keep them in a dormant state until market conditions improve, administrator Interpath Advisory confirmed to S&P Global Platts.
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In August last year Severn Power in South Wales and Sutton Bridge in Lincolnshire were taken out of the generation market while the administrator (then KPMG) sought to recover costs for creditors. Since then KPMG has sold its restructuring business to Interpath Advisory.
"Both Sutton Bridge Power Generation and Severn Power Generation exited administration at the end of March, via a Company Voluntary Arrangement, and control has been handed back to the directors," an Interpath Advisory spokeswoman told Platts May 12.
Interpath had worked alongside management to develop new business plans for the power stations' operating companies, Interpath Advisory said.
Calon's primary secured creditor, Beal Bank USA, has provided GBP4.9 million ($6.88 million) to meet operating costs and expenses of the preservation process for an initial period, and the directors have appointed NAES Power Solutions Limited to operate and maintain the power stations.
"We understand the directors plan to continue to hold the power station assets in a dormant state, under a preservation plan until such a point where market conditions are such that the decision is made to return the power station to an operational state," the administrator said in a final report dated March 26.
Calon directors were not immediately available to comment on when the power stations might return to service.
Window of opportunity
A return to service for Severn Power and Sutton Bridge in time for Winter 2021-22 was possible given a lead time of two to three months to re-commission the assets, said S&P Global Platts Analytics' head of European power, Glenn Rickson.
"Our baseline view is that UK Clean Spark Spreads get progressively lower over the next two to three years, so if the plants aren't economic now then they will be even less so in a couple of years," he said.
Two big "decision points" in the near future that might accelerate a return would be the launch of the UK Emissions Trading System, and the T-1 Capacity Market auction in the first quarter of 2022, he said.
Baglan into receivership
Meanwhile, Baglan Operating Limited, another Calon company that owned the 582-MW Baglan Bay CCGT, was placed into official receivership in late March.
"My officials will work with the insolvency service and partners over the coming period to support the company and its employees," Ken Skates, Minister for Economy, Transport and North Wales, said in a written statement March 24.