UK energy consumers could face a billion pound bill for their electricity next winter through a new subsidy scheme that will pay energy companies to keep their power plants open. The support contracts will be awarded through a competitive auction taking place this week to avoid further power plant closures and guarantee enough power to meet demand next winter. In a major departure from previous schemes National Grid will pay to secure a full battalion of power plants to meet peak winter demand, rather than support a handful of plants which are at risk of closing. As a result existing low-cost coal-fired power plants are in line for millions in subsidies even after Government vowed to shut them down by 2025. The 53.6GW power auction, which began on Tuesday, dwarfs the scheme for the current winter which secured a 3.5GW reserve bench of around ten power plants for £120m to ramp up to meet demand if the existing plants fail to meet demand. The cost of next winter’s scheme could climb to highs of between £1.5bn-£2bn depending on the outcome of the auction, but even at the low-end of analyst predictions the cost is likely to reach £650m, over four times the price paid to secure electricity supply this year.
Telegraph 1st Feb 2017 read more »