Scotland’s Energy Minister Fergus Ewing has said the UK Government has failed to keep the country’s power stations open and protect energy security after Westminster brought forward plans to ensure there is enough electricity to meet peak demand.
He was responding to announcement by the Department of Energy and Climate Change that measures to pay energy companies to ensure there is enough power in the system to meet peak demand will be brought in a year earlier.
The “capacity market”, in which generators bid for contracts to guarantee there are enough power plants on stand-by to meet UK’s electricity needs through the winter, will now come in for 2017/18, instead of 2018/19 as planned.
Ageing coal-fired power plants are closing under air pollution regulations and the Government has proposed phasing out all coal plants by 2025 to cut greenhouse gas emissions.
Ministers want to see new gas plants built to fill the supply gap caused by closing coal plants, to secure power when renewables may not be available on the system.
Falling global fossil fuel prices – which have reduced energy costs – have also made generating power unprofitable for many non-renewable energy plants and they are being under-used in the face of more clean power supplies.
Many coal plants are already closing, with three of the four units at Fiddler’s Ferry power station in Cheshire, set to shut despite having secured a contract to provide capacity in winter 2018/19, which owner SSE face a fine for breaking.
Ewing said it illustrated the UK Government’s policy had been an “abject failure”.
“We have called repeatedly over many years for action to protect baseload and backup capacity, so today’s proposals to reform the Capacity Market vindicate the Scottish Government’s position.
“In rushing out new measures to plug the capacity gap, the Secretary of State is belatedly addressing the seriousness of the UK’s energy crunch and acknowledging the market has not delivered.
“Support to retain existing gas-fired capacity and build new plants is welcome, but the unfortunate reality is that higher transmission charges in Scotland mean no new stations would be built here as the costs of using the grid are higher than in England.
“This discriminatory regime means Scotland cannot attract new thermal generation when in competition with alternative sites in England, yet the UK Government has shown little understanding and no willingness to tackle this issue.”
Reforms to the system announced by Westminster also involve plans to buy more electricity capacity and to buy it earlier to encourage investment in new gas-fired power stations to secure power supplies.
The reforms include tougher action on companies which back out of their contracts, by closing power plants for which they have won payments for keeping online to meet peak demand.
The closure of ageing coal-fired power plants and a lack of investment in new schemes such as gas-fired power stations means the margin between the UK’s peak demand for electricity and the amount of generation on the system has tightened, raising fears of blackouts.
Energy and Climate Change Secretary Amber Rudd said: “The capacity market has driven down costs and secured energy at the lowest possible price for bill-payers, but I’m taking further action to tackle the legacy of under-investment and ensure our country’s long-term energy security.
“By buying more capacity earlier we will protect consumers and businesses from avoidable spikes in energy costs.
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