Britain’s latest auction for back-up electricity generating capacity has ended with contracts awarded at prices well below those needed to incentivise construction of new large-scale gas power plants. Existing gas and nuclear power stations and small new gas plants were among the main winners in the auction, which was designed to ensure the UK has adequate electricity supplies in the early 2020s as coal-fired generation is phased out. But several proposed large gas power stations failed to win contracts, denying them the guaranteed revenue needed for the projects to go ahead. The auction results will raise concern among those in government and industry who believe that more large gas-fired plants will be needed to replace the UK’s remaining coal plants, all of which are due to close by 2025. But some analysts and industry executives said the auction’s success in procuring 50 gigawatts of capacity at record low prices should be welcomed as a sign that Britain can keep its lights on at a lower cost than previously expected. Jonathan Marshall, analyst at the Energy and Climate Intelligence Unit, a green think-tank, said the falling cost and increasing availability of renewable wind and solar power meant that building large gas-fired plants no longer made economic sense. “This takes us to four auctions without significant new large gas plants coming to fruition,” he said. “Big gas plants are not needed to bridge the gap between coal and renewables.” More than 86 per cent of the capacity that won contracts came from existing gas and nuclear power stations, many of which are due to retire in the next two decades. A further 10 per cent of the winning capacity came from interconnectors which import electricity from continental European countries and Ireland.
FT 10th Feb 2018 read more »
Britain’s much-needed investment in new power plants will favour small-scale projects and batteries after a Government auction to secure future power supplies fell to its lowest ever level. The would-be developers of large-scale gas plants were locked out of an annual reverse auction, which cleared at its lowest ever price of £8.40 per kilowatt for the year 2021 to 2022.
Telegraph 9th Feb 2018 read more »
Britain’s latest auction for back-up electricity cleared well below expectations but without many new gas projects securing agreements which are thought to be needed to help bridge the gap when coal and nuclear plants come offline next decade. Thursday’s auction for 2021/22 supply cleared at 8.40 pounds ($11.71) per kilowatt (kW) per year, National Grid’s website showed, well below the 15 to 25 pounds range which analysts had forecast. In December 2016, a similar auction for supply four years in advance (2020/21) cleared at 22.50 pounds/kW/year.
Reuters 9th Feb 2018 read more »
Record low clearing price for capacity market auction sparks questions over scheme’s future. The low price is good news in the short term for energy billpayers, but has prompted fears the acution is now sending a strong enough price signal to developers of new, cleaner capacity. “Without adequate price signals from the auction we won’t get much in the way of new capacity, and at the same time support coal until it is forced off the grid by legislation,” Jonny Marshall, senior analyst at the Energy and Climate Change Intelligence Unit, wrote on Twitter. Most of the UK’s generation fleet bid into the auction, which represents an opportunity for plants to earn extra cash alongside their revenues from the wholesale market. Over the years, the auctions have largely served to keep existing plants running rather than encouraging new types of generation – such as new battery storage capacity or peaker gas power plants – onto the grid. This year was no different: out of more than 50GW of capacity that won an agreement, just 762MW was new-build generation, according to auction operator, the EMR Delivery Body. Such new generation is seen by the government as vital to replace coal capacity as it is forced off the grid by government legislation through to the mid-2020s.
Business Green 9th Feb 2018 read more »