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UK Capacity Market Analysis

UK Capacity Market Analysis
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The UK capacity auction results were announced today (for October-2019 to September-2020).  It was a shambles as expected: no new gas or interconnection, very little demand-response, and lots of new diesel funded by generous tax-breaks for investors.

“The capacity mechanism is having the perverse effect of slowing the modernisation and decarbonisation the UK electricity system. The mechanism has failed to attract any new efficient gas plant or interconnectors, and it is paying coal to stay open longer than it would have otherwise, despite a government pledge to phaseout coal generation.

Also, a tax loophole –the Enterprise Investment Scheme – is funding super-profitable new diesel plants to be built, which evade carbon pricing and strict emissions limits, and although they are cheap to build, are expensive and polluting to run. Amber Rudd promised that after this year’s capacity auction, she will “take stock and ensure it delivers the gas [capacity] we need”. This review needs to be as thorough as possible, and should also include an investigation into how the capacity mechanism has become such a shambles.” – Dave Jones, Policy Analyst, Sandbag

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Posted on

December 31, 2015