Households will fund retainer payments to keep more than 53GW of power stations ready to fire up when needed. Analyst Peter Atherton estimates total payments to energy companies could be in the region of £1.6bn.
Consumer energy bills will rise in order to pay retainers to dozens of power stations to guarantee they are available to keep the lights on, ministers have announced.
Under a so-called “capacity market”, ministers plan to recruit more than 53GW of power stations – enough to meet 80 per cent of Britain’s peak demand – to ensure they can fire up when needed.
Households will each pay an average of £13 a year to the power plants, to guarantee they are ready on the system from 2018-19.
The Government has previously described the system, which will be paid for through levies on household bills as an “insurance premium against the risk of blackouts”. It hopes the scheme will keep existing gas and coal power plants from mothballing and encourage the construction of dozens of new gas plants by helping to guarantee their profitability.
Building new gas plants is otherwise unattractive, because as Britain builds more wind farms, gas plants may only run for short periods of time when the wind isn’t blowing.
Ed Davey, the energy secretary, said that the policy would add £2 to consumer bills. […]
Analyst Peter Atherton at Liberum Capital said that total payments to energy companies under the scheme could be in the region of £1.6bn, implying payments of at least £20 per household.