State investment in more expensive, polluting forms of energy have come at the expense of low-carbon baseload technologies and show a lack of understanding of the abilities of energy storage.
The Capacity Market, a scheme designed to promote energy security, officially closed yesterday and the full results have now been released. The auction cleared at £18 per kW, a price considered low and perhaps unviable for many projects, and at a cost to consumers of more than £1 billion.
The Government must reform the Capacity Market to limit emissions from plant awarded contracts, according to the REA.
Many renewable technologies could have provided better value, lower carbon options, such as highly-efficient biomass power plants as could newer energy storage technologies.
Approximately 450 MW of demand side response successfully cleared the auction, more than double last year’s auction, which was welcomed by the industry body. However the lack of new-build energy storage shows that the design of the mechanism needs to be adjusted to better incentivise greater investment in energy storage and demand side response capacity. 153 MW of energy storage capacity entered the auction but could not secure any contracts.
Frank Gordon, Senior Policy Analyst at the REA said:
"This year’s Capacity Market auction underlines the problems with the policy- that it does nothing to support the move away from higher carbon to clean energy, and it does not adequately consider value for money.
The latest renewable power support policy (CfDs), while not ideal, includes value for money guarantees and secures inherently low carbon generation. Renewables are the only form of power generation that have been delivering new capacity in recent years at any scale so the Government’s best chance of ensuring supplies and meeting legally binding renewable and emissions targets is to better support this sector."
"When the detailed results are published it looks likely that what was dubbed ‘Diesel-gate Mark 2’ by some will be shown to be the case, with significant contracts awarded to new diesel generation capacity.
If nothing can now be built in the UK without subsidy (nuclear, fossil fuels and renewables), then why not support the lowest carbon options? These also address air pollution issues while spreading jobs and investment to more parts of the country. Many renewable technologies can crucially provide the same ‘baseload’ capacity as fossil fuel generation, including biomass, anaerobic digestion, and energy from waste."
The auction results must also be viewed in the wider policy context. Since June there have been thirteen proposed and enacted policy changes which have been hugely damaging to the renewable energy and low carbon industries. A summary of these changes can be seen below.
