The UK has secured 46.35GW of extra power capacity for 2019/20, with gas accounting for a majority share.
The news comes after Energy Secretary Amber Rudd said gas-fired power plants would replace coal as the latter will be phased out by 2025.
The second Capacity Market auction, which ensures there is enough electricity supply to meet peak demand, will pay generators £18/KW to keep their power plants open.
The price is more than £1 cheaper than last year “as this auction attracted enough bidders to secure the extra power at a competitive price”, DECC said.
The companies that won contracts include Centrica, EDF, RWE, E.ON, Drax and UK Power Reserve.
SSE also won some contracts but said it missed out on almost 3GW of capacity. Two of its biggest facilities – Fiddlers Ferry coal plant and Peterhead gas-fired station – didn’t receive contracts.
Nearly half – or 21.8GW – of contracts were awarded to gas-fired power plants, 7.5GW nuclear, 4.6GW coal and biomass while storage and hydro accounted for 2.6GW and 1.8GW.
Demand side reserve (450MW) and interconnectors (1.86GW) were also successful in the auction.
Energy Minister Andrea Leadsom said: “Our number one priority is to ensure that hardworking families and businesses have access to secure, affordable energy supplies they can rely on.
“This result represents a good deal for customers – fierce competition in the Capacity Market has driven down costs, meaning future capacity has been secured the lowest price possible.”
Earlier this month National Grid said it secured an extra 3.58GW of electricity to cover potential demand during winter 16/17.