Diesel farms in Britain could win contracts worth hundreds of millions of pounds in order to keep the lights on as part of a government scheme.
Payments to power plants are intended to make sure that there is enough generating capacity on the power network as plans have failed to deliver enough new gas plants to replace older coal fired power stations.
Diesel farms will bid for contracts in an auction that is intended to secure an extra 45 gigawatts of power over four years. Existing power plants, newly planned power plants and operators of interconnector cables will be able to take part in the auction.
However critics suggest that instead of making sure new gas plants are built it is facilitating the growth of diesel power generation which is more polluting than gas.
Jimmy Aldridge at the Institute of Public Policy Research has said, “In the same week that world leaders are in Paris negotiating a climate deal, the UK government is handing out new subsidies to the most polluting form of electricity generation available. This is allowing sky-high returns for diesel investors, but terrible value for money for consumers.”
In last year’s auction operators of diesel sites won £109 million worth of contracts. It is estimated that at this year’s event an additional £434 million more could be generated.
There has been an increase in the growth of diesel energy generation over recent years. Sites can respond quickly to provide power when there is increased demand placed on the National Grid.
It is estimated that the capacity market could add approximately £14 to a typical annual energy bill.
The government has responded by saying that the capacity market is technology neutral in order to buy the lowest priced capacity to deliver value for money.
The Department of Energy & Climate Change has said, “Our number one priority is to ensure that hard working families and businesses have access to secure, affordable energy supplies they can rely on, now and in the future. The capacity market is a key part of our electricity market reform. The competition helps to drive down costs, while ensuring we have enough generation to power the nation.”