POWER group SSE's plan to cut the output of Peterhead power station by two-thirds is not technically possible without modifications that could cost more than the move will save, the Sunday Herald has learned.

The revelation has prompted questions about SSE's real intentions for the plant. It comes after its new chief executive, Alistair Philip-Davies, was forced to deny any prospect of mothballing Peterhead at the company's annual meeting last week.

The Perth-based utility announced a plan several months ago to cut the plant's capacity from 1180MW to 400MW from next March, below the size of the largest onshore wind farms.

This was part of a wider move to close or curtail various gas-fired plants across its UK portfolio because the gas price has become sufficiently high that they are barely profitable to run.

At Peterhead, there is the additional problem that transmission charges for plants rise higher the further north you go – the subject of reform proposals by regulator Ofgem. Three years ago, the plant cut its capacity from 1840MW to 1180MW. The new plan will save £16.5 million a year in charges.

However, it has come to light that the plan is not viable because it will put the plant's capacity below the stable export limit (SEL) of 480MW. The SEL is the absolute minimum at which the plant can legally run for any sustained period of time.

Even at the SEL, it is highly unlikely that the plant would run except during periods of the highest demand, since it is almost 20% less efficient than at the maximum output limit. This means that you need almost 20% more gas to make the same amount of electricity and you produce almost 20% more carbon emissions.

According to a senior engineer familiar with the plant, SSE has several options for getting around this problem. It can either modify the plant's steam turbine or replace it, which he estimated would cost £50m or £140m respectively once necessary upgrades to the plant's system and gas turbine had been made too.

Describing the project as having "huge technical difficulties", he said that there was a debate within SSE whether it was technically feasible to get away with the cheaper option.

He said: "[That] option was always rejected at an early project stage as it never crossed economic or technical hurdles."

Both options are well beyond the timescale – it is required to be ready by next March. Upgrading the gas turbine has a lead time of two years, while the engineer estimated that producing a new steam turbine could take three years.

This delay would mean that SSE would have to buy extra capacity permissions on the open market if it wanted to run the plant in the meantime, which would also add to the cost of the downgrade.

Other SSE sources played down suggestions that the costs would be quite so high, or that it would take three years to procure a steam turbine. They also said the company was already looking at the gas turbine upgrades, which would make the procurement quicker.

Dave Watson, Scottish organiser of trades union Unison, said: "It is highly unlikely that SSE have made a cock-up here. They've been running Peterhead for a long time.

"If it's not feasible to do what they are claiming, I would be more suspicious that this is part of their PR strategy in relation not just to transmission charges, but more broadly to energy market reform."

An SSE spokesman said: "[The decision to cut capacity] will reduce the operating costs of Peterhead by several million pounds and help secure the long-term future of the power station.

"Beyond March 2014, to efficiently operate the plant at Peterhead, SSE will either need to secure additional [capacity] to export above the 400MW limit, or invest in adaptations to the configuration of the gas and steam turbines to allow them to operate below their stable export capacity of 480MW.

"Work is already under way to assess the best technology option for efficiently reducing the optimum operating capacity to below 400MW and SSE expects to provide an update on this work at its interim results in November.

"In the meantime, Peterhead continues to be a substantial and important long-term asset for SSE and the changes being considered are not expected to have any impact on jobs at the site."