Longannet power station will close within a year, workers will be told today.
The Fife plant, Scotland's last coal-fired power station, had been expected to shut down by 2020 but confirmation of its premature closure will come as a huge blow.
There are around 430 permanent on-site employees, while around 100 small businesses receive regular contracts from the power station, worth around £10m per year. The plant was described as a "hub for the local economy" at Holyrood earlier this month.
Scottish Power, which runs the plant, had hoped that it would have been able to stay open for at least another two years if it had won a National Grid contract to maintain voltage in the electricity supply.
However, it is understood that the SSE-run Peterhead power station has won the deal, sealing Longannet's fate.
The 40-year-old plant has become increasingly uneconomical in recent years, as a result of stringent environmental taxes.
Scottish Power and the Scottish Government have also hit out at a transmission charging regime which leaves Longannet facing huge costs to hook up to the National Grid due to its location.
The firm will now give a year's notice, as required by law, to take the plant offline. It is hoped that some employees will be deployed elsewhere in the company.
It is likely that as a result of the closure of Longannet, Scotland will become increasingly reliant on importing energy from other parts of the UK. Scottish Power believe that the transmission charging regime mean it is uneconomical to build a new gas-powered plant, and will continue to lobby the UK Government to overhaul the system.
A plant insider said: "This is a real blow, it's been a huge part of the landscape for years and is the second biggest coal plant in Britain and the third-largest in Europe. But the truth is it just isn't economical any more, the contract that's gone to SSE was its last hope."
Neil Clitheroe, CEO ScottishPower Retail and Generation said: "We are extremely disappointed with National Grid's decision as ScottishPower submitted a competitive bid that reflected our commitment to protecting the immediate future of Longannet Power Station. As we have said previously, today's decision by National Grid means that, in all likelihood, we will be forced to announce the closure of Longannet by March 2016.
"Everyone will appreciate that it is a concerning time for all our people and we will do everything in our power to manage the outcome of this process as best we can.
"The issue regarding punitive Transmission Charges has not changed, and this still negatively impacts the future of the station. Beyond that, the current Transmission Charging regime is a major barrier to any future investment in flexible thermal power generation in Scotland. In any future scenario for Scotland, it is vital that the network here is supported by flexible generation to compliment renewables."
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