Britain forced to subsidise gas power plants to keep lights on 

Posted: December 4, 2016 by oldbrew in Energy, government
Tags: , ,

Carrington Power Station near Manchester

Carrington Power Station near Manchester


Britain has backed itself into a corner over electricity supply by rigging the market to favour renewables, but as the Daily Telegraph explains, things will have to change.
H/T GWPF

As a result of Britain’s energy policies, building new gas-fired power plants is no longer economic. Now, the Government has to subsidise gas investors to keep the lights on.

Four years ago this week, the Government unveiled plans for a bold new dash for gas. New gas-fired power stations, then-energy secretary Ed Davey said, would be required to “provide crucial capacity to keep the lights on”.

A new Gas Generation Strategy backed “significant investment” in up to 26 gigawatts (GW) of new plants by 2030. Since then, energy ministers have come and gone, support for solar and onshore wind has been scrapped and the drive for new nuclear has faced security and cost worries.

But support for gas had been unwavering. Relatively cheap and quick to build, much cleaner than coal, and able to generate even when the wind doesn’t blow or the sun doesn’t shine, gas plants tick all the Government’s boxes. “In the next 10 years, it’s imperative that we get new gas-fired power stations built,” Amber Rudd, Davey’s successor, declared last year.

There’s just one problem: pretty much no one’s building them. Only one new station, at Carrington in Manchester, has been completed since 2013 as investment has dried up. This week, though, that could be about to change. A subsidy scheme designed to keep the lights on could, analysts believe, secure construction of several big new gas plants.

Few could dispute that the UK needs new power plants. “An awful lot of capacity has either closed or is closing,” explains Richard Howard, of Policy Exchange. The think-tank calculates that some 23GW of conventional thermal power plant capacity has been closed or mothballed since 2010. “That’s more than a third of peak demand,” says Howard. “And a further 24GW of coal and nuclear is expected to close between now and 2025. We need to build some new capacity – otherwise the lights will go out.”

The problem is, the UK electricity market has changed so much – due in large part to the growth of subsidised renewables – investors say they can no longer justify building new plants based solely on their likely returns from selling power in the market. “Essentially no new capacity is being built without some form of government-backed contract,” Howard says.

Full report: Britain Forced to Subsidise Gas Power Plants To Keep Lights On | The Global Warming Policy Forum (GWPF)

Comments
  1. ivan says:

    Maybe, just maybe, it is time for the government to make the renewable power industry stand on its own feet and live or die.

    Remove all subsidies and preferential treatment of electricity produced by renewables. Let those suppliers compete on the open market, they should be raking it in after all the wind and sunlight is free. Maybe we, the taxpayers, should be charging them for the use of the machines bought with our taxes.

    Unfortunately, this will never happen as long as the EU sets the agenda and we have government departments that march to the green tune and worship at the sustainable church.

  2. wolsten says:

    Unfortunately it is far from the case that subsidies have been removed. Contracts for Difference and constraint payments (amongst others) are still available to prop up the futile renewables industry. Amber Rudd said last year that we can’t build ANY capacity without subsidy and yet here we still are. Unfortunately, it may take something like the recent statewide blackout in South Australia to get our politicians to wake up to this issue. I am not optimistic.

  3. oldbrew says:

    wolsten: onshore subsidies have been removed.

    DT: ‘support for solar and onshore wind has been scrapped’

  4. tom0mason says:

    Booker highlights those OBR numbers:

    As the costliest project any British government has ever proposed, the HS2 rail scheme has rightly drawn heavy criticism from those asking why we are to spend £56 billion on a venture which promises such puny benefits. But most people remain strangely oblivious to a far greater cost to which the Government has committed us, for a purpose even more demonstrably futile.

    What should be making front page news is the story revealed by the latest figures from the Office for Budgetary Responsibility (OBR), predicting the soaring cost over the next six years of all the “environmental levies” imposed on us under the Climate Change Act. Between now and 2022, according to the OBR, these will amount to £65 billion, of which £36 billion will be subsidies we shall all be paying through the “renewables obligation”, mainly to the owners of our ever-growing number of windfarms.

    These subsidies alone will represent a near-trebling of what we are already paying through our electricity bills, which by 2022 the OBR predicts will have risen to nearly £7 billion a year.

    From Paul Homewoods notalotofpeopleknowthat site.

    So on top of all that taxpayer and electricity users will be paying for the gas generation as well.
    What is this an inverted 1966 with Russia as a free trade area and western Europe as the communist collective?

    Scrap the subsidies now!
    The UK electricity industry is fast becoming a modern day British Leyland.

  5. tom0mason says:

    As I’ve put on a different thread —

    Dump the renewables, all of them.
    Put the UK electricity back onto a proper functioning market, no subsidies just pure trade rules.
    And with the money saved buy carbon-offsets by the bucket-load from all the commonwealth and ex-commonwealth countries. And while the UK is doing that renegotiate trade deals with all of them for food, textiles, grain, raw materials, etc.
    The moment the EU balks at it the UK calls Article 50 and waves good riddance to them.

  6. A C Osborn says:

    As tom says, the government needs to dump them all, because all they are doing by adding subsidies to Wind & then Solar and then Nuclear and then Tidal and now Gas (But not Coal) is to continually increase the cost of Electrical Generation and everything that is manufactured.
    Cloud Cuckoo land.

  7. oldbrew says:

    If they want to keep rolling out the red carpet for unreliable renewables, everything else (gas, nuclear, coal etc.) will have to be compensated one way or another for the inevitable losses that result from being forced to the back of the sales queue. If not, they will (continue to) just retire from the market place altogether.

  8. wolsten says:

    @Oldbrew

    Are you saying that CfD and constraint payments are no longer available to new projects? If so can you point me at a source because though that is not my understanding it would be welcome news.

  9. tom0mason says:

    The race to the bottom in the subsidy markets are nothing more than reverse Robin Hood marketing — robbing the ordinary users and taxpayers to pay big money to (mainly foreign) conglomerates.

    It’s such a shame that Britain has neither the talent (and imagination) nor the investment capability to grow any native business model to run the electricity market.
    It does have a world class abundance of bureaucratic inertia intent on retaining (and probably growing) the status quo.

  10. wolsten says:

    @oldbrew

    Thanks – that is encouraging but I understand there “may be” concessions for the expansion of existing schemes, like Scout Moor near us, and this doesn’t rule out constraint payments, which I still argue are a form of subsidy. There are also Renewable Obligation Certificates available until March, and again I believe there may be concessions for some schemes.

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