The energy secretary, Amber Rudd, has pledged to look into the government initiative that subsidises companies that construct reserve power generation units. The scheme has come under fire in recent times because of its so-called over-dependence on using diesel instead of gas.
On the day of her long-awaited speech on energy policy, Ms Rudd spoke to the BBC to confirm that she will be looking into a change of regulations that govern the capacity market auction. She will do this after the last round of winter bidding.
It is thought that the auction has led to millions of pounds being spent, by the public, on subsidies for highly polluting, cheap diesel-powered generators. However, it is also reported that the auctions have successfully forced down the price of generating reserve energy.
On the Today programme, Ms Rudd said that she wanted to fundamentally change the rules of the reserve generation scheme so that it favoured the use of gas instead of coal.
She stated:
“We have a capacity market auction coming up. We are going to review it carefully afterwards and ensure that we do get the new gas we need”.
One move, which she believes will be beneficial to the amount of gas power in the country, is the closure of coal-fired power stations. She is expected to say that she wants all of these stations to be closed by 2025.
She went on to say:
“We need to give a clear signal to people who are in the market for building new gas stations that they will no longer be crowded out by coal”.
The past months have seen the government’s energy policy largely comprised of cuts to green subsidies, which were aimed at helping companies develop renewable sources of energy such as wind or solar farms.
In her speech she will say that:
“It cannot be satisfactory for an advanced economy like the UK to be relying on polluting, carbon intensive 50-year-old coal-fired power stations. Let me be clear: this is not the future”.
“We need to build a new energy infrastructure, fit for the 21st century”.
While Ms Rudd is expected to state her intention to see all coal plants closed by 2025, EU air quality laws state that all coal plants must be closed by 2023. The only exception to this is for plants that change over to a system that produces less emissions.
It had been believed that the energy secretary would push for all coal stations, including those that had upgrade to lower emissions, to be shut down by 2023. However, it seems that this deadline has now been extended by a further two years. It is widely believed that this is, in part, down to companies failing to construct new gas-powered stations. Many of these companies say that this is because the low wholesale price of electricity has made their construction uneconomical.
The head of energy at Greenpeace, Daisy Sands, said:
“A government policy to move away from coal is welcome, but we also need policies ensuring a plan to make sure our polluting coal plants are replaced with the clean, renewable, flexible energy infrastructure Britain really needs”.
There are several different pressures that are making Ms Rudd’s task of shaping energy policy difficult. She has attempted to cut consumer costs by cutting back hugely on renewable subsidies.
David Cameron’s promise to bring about the “greenest government ever” is supposed to be supported by the recent policy announcement on coal stations. However, the amount of wiggle-room between supply and demand for energy this winter is the lowest it has been for a decade, which has led many to call for renewed investment in thermal power stations.
These urges have been increased in the last couple of weeks because of a one-day energy shortfall, which was announced by the National Grid. This led to a jump in wholesale energy prices and companies being paid by the National Grid to cut the amount of energy that they used.
An increase in the number of gas-powered energy stations will be central to Ms Rudd’s attempts to tackling the rising demand for power. In her speech she will outline the fact that “gas is central to our energy-secure future. In the next 10 years, it’s imperative that we get new gas-fired power stations built”.
The Financial Times released a quotation from a chief executive of a large power utilty that read:
“We should be doing more to encourage gas, for example by taking into account emissions when carving up subsidies in the capacity mechanism”.
The shadow energy secretary, Lisa Nandy, stated on Wednesday:
“It’s been clear for years that Britain’s coal stations are so old and so polluting they would need to close over the next decade. Now we need to build new, cleaner power stations to take their place yet this government’s chopping and changing of energy policy is putting off the investment we urgently need to secure our power supplies”.
