Warning capacity market could boost energy bills

An academic has sounded the alarm over a new auction meant to make sure there is enough power supply for the UK by claiming it will lead to higher energy […]

By Vicky Ellis

An academic has sounded the alarm over a new auction meant to make sure there is enough power supply for the UK by claiming it will lead to higher energy bills.

The warning from Catherine Mitchell, Professor of Energy Policy at the University of Exeter came on the eve of the first ever capacity auction which opens today.

She criticised the auction set up of the new capacity mechanism, where big power generators bid in to provide baseload energy, as based on an “outdated” view of energy.

Prof Mitchell said: “The capacity market is designed around the outdated and over-simplistic notion of 100% renewables back-up: that every 1 gigawatt of wind power capacity needs 1 gigawatt of coal or gas-fired capacity on standby.”

Instead demand side response would be a better option, she argued: “The costs and carbon emissions from using demand-side measures are substantially lower than those associated with running extra fossil-fuel power stations. It is cheaper, easy and greener.”

Some demand side providers have privately complained the rules of the capacity auction make it hard for them to get involved.

Others in the industry have expressed “confidence” it will provide good value energy for consumers.