Small power plant developers seeking Government subsidies to help keep the lights on have been warned they face losing a large chunk of their income that could render them uneconomic. In a move that is likely to boost the chances of big new gas power plants securing subsidies and getting built instead, energy regulator Ofgem has published an open letter warning it may remove lucrative benefits that small power plants currently enjoy. The Government is preparing to hold a “capacity market” auction next week to award subsidies to power plants that can guarantee to generate when needed in winter 2020-21. It hopes this will support companies to build big new gas plants. However, in previous years it has found that such projects have lost out to smaller plants like diesel and gas engines. They are able to undercut their bigger rivals because they also enjoy a significant separate revenue stream under the complicated system of network charging set by Ofgem. The regulator has been considering reforms to cut such revenues after concluding the small plants may be getting an unfair advantage.
Telegraph 2nd Dec 2016 read more »