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UK capacity market has failed to deliver flexibility, says think tank
The UK is struggling to get any reliable power generation built under its existing energy policies, as Utility Week explains. Meanwhile subsidies to renewables, and old coal-fired plants (as emergency back-up) roll on, making the future uncertain.
The capacity market has failed to deliver flexibility and reliable new-build generation, a new report by the Institute for Energy Economics and Financial Analysis (IEEFA) has argued. Existing generation should be exiled from the mechanism and support reserved for flexible new-build capacity, according to the think tank.
“While the goal of the capacity market was to drive investment in reliable new generation, the scheme—with £3.4 billion in awarded contracts to date—has yet to incentivise a single large new power plant,” the report said.
“This support for existing generation is distorting energy markets and has subsidized outdated investment, including more than £450 million for existing coal-fired power plants.” This was despite government intervention to increase the volume of new generation contracted by increasing the procurement target in the most recent four-year-ahead (T-4) auction.
“The enlarged T4 auction took place in December 2016, but achieved only a tiny increase in new generation as a proportion of the total contracted capacity, from four per cent to seven per cent,” the report said. It noted that the only new build combined-cycle gas turbine to secure a contract was a 370MW replanting of an existing power station in King’s Lynn.
The government should instead “repurpose” the capacity market and hold “smaller, targeted capacity auctions solely for flexible, new-build generation, including gas peakers, demand-side response and storage”.
The report continues here.
Source: https://tallbloke.wordpress.com/2017/03/09/uk-capacity-market-has-failed-to-deliver-flexibility-says-think-tank/
