Engie is set to close its 1GW Rugeley power station early this summer because of deteriorating market conditions for coal-fired generation.

The firm says falling power and commodity prices, and increasing costs for carbon allowances, mean there is “no prospect of the power station recovering its future operating costs.”

Last week SSE announced plans to close down three of the four units at its Fiddler’s Ferry coal-fired plant this spring, despite facing £33 million in capacity market penalties for doing so.

David Alcock, chief executive of Engie’s energy infrastructure division in the UK, said: “We implemented a number of changes at Rugeley a year ago in order to help maintain operations at the site but a combination of falling prices and the impact of various market changes has now made this unviable.”

150 jobs could be lost at the plant in Staffordshire, subject to consultation with employees, although Engie said it will try to redeploy workers to other parts of its business.

Alcock added: “It is with deep regret that we have had to make this decision at Rugeley. Our priority now is to support the employees and help them through this period.

“We will of course keep all options for the power station under review, and will maintain dialogue with all stakeholders as we proceed with the employee consultation process. I would personally like to thank everyone at Rugeley for their contribution to our business and for their loyal service to the power station.”

Energy secretary Amber Rudd promised to phase out all unabated coal-fired generation by 2025 in her energy ‘reset’ speech in November. On Monday, Drax Power chief executive Andy Koss warned that coal could still be needed further into the future if new capacity didn’t start getting built soon.  

Read Utility Week’s analysis, ‘Keeping the lights on: will coal and nuclear closures leave a supply gap?’ here