Government moves to limit subsidies for diesel power generators will put up electricity prices and exacerbate Britain’s supply crunch, according to a report. The study, by consultancy Cornwall Energy on behalf of a lobbying group that represents small electricity generators, including diesel ones, says cutting support will hurt other small providers, but not enough to clear the way for larger, more efficient gas plants. Nigel Cornwall, one of the report’s authors, said: “There are real risks with what the government is thinking of doing. We could potentially be taking out 2 gigawatts of capacity. Doing that in the hope that some of the gas plants will turn up is a very high-risk strategy.” One way the government has sought to encourage power generation is to offer subsidies through a scheme called the capacity market, which pays extra to generators who provide power at short notice. Ministers hoped the scheme would encourage companies to build efficient new gas plants, but instead much of the money has gone to smaller, cheaper, but more polluting diesel and small gas generation.
FT 23rd May 2016 read more »