Public money in the next Capacity Market auction, which aims to ensure the UK has sufficient capacity to meet demand, will be used in supporting old and inefficient power plants.
That’s according to think tank Green Alliance which claims the government will expand the auction to ensure new large-scale Combined Cycle Gas Turbines (CCGT) power plants win contracts instead of flexible and new technologies.
The next capacity auction to guarantee winter power supply from energy companies is scheduled for December. The government aims to secure 52GW of electricity.
However Green Alliance, citing Cornwall Energy, said recent reforms to the Capacity Market mean costs to consumers could rise threefold to £2.6 billion compared to the previous auction.
It believes the government’s preference for CCGTs is distorting the market and putting a “high burden” on consumers.
Amy Mount, Lead Author of the study said: “Everyone seems to like the idea of a smart energy system but current policy isn’t very smart. It is asking consumers to pay three times more than they did last year to old, inflexible power plants which won’t match what the power system really needs.”
The Department for Business, Energy & Industrial Strategy (BEIS) said the Green Alliance report fails to acknowledge the main purpose of the Capacity Market to secure the UK’s energy supply.
It added the auction is a competition and so the final cost will depend on the clearing price, therefore it is “impossible” to predict the exact costs and that it “does not favour any particular form of technology over another”.
A spokesperson said: “The Capacity Market acts as an insurance policy to ensure our energy supplies are at the lowest possible cost for households and businesses. A wide range of energy providers and technologies are able to participate as well as giving users the opportunity to turn down their electricity consumption at peak times.”