More government subsidies to fossils whilst renewables remain blocked to market

• Capacity market auction results today shows continued Government support for fossil generation
• Three-quarters of power secured in auction is gas, nearly two per cent is diesel, and nearly eight per cent is coal
• Under six per cent is renewable and less than two per cent is storage
• Government policy elsewhere effectively blocks new renewable power projects to market

The provisional results of the T-1 Capacity Market Auction, released today by National Grid, show that the overwhelming majority of back-up power generation capacity secured is from fossil sources.

Such support for fossil sources comes as the Government has confirmed that there will be no new funding for renewables projects under the Levy Control Framework beyond 2021 and no new proposals have been introduced to give clarity around how the future renewable power market might be structured in the Framework’s wake. Clarity around how renewable heat deployment will be supported beyond 2021 has also not been offered.

The Government maintains a de-facto ban on onshore wind, large-scale solar and biomass deployment by not funding “Pot 1” of the Contracts-for-Difference auctions and ending Feed in Tariffs for smaller generation. This, in addition to other cuts recent to the renewable energy sector since 2015, have resulted in a 56% decline in investment in 2017 compared to 2016 according to Bloomberg New Energy Finance analysis.

Innovative storage projects, the likes of which the Government has committed to supporting through the Faraday Challenge, were directly hit in this auction as a result of recent “de-rating” decision which reduced their competitiveness after the auction process had started.

James Court, Head of Policy and External Affairs at the Renewable Energy Association said:

“This is another example of Government subsiding fossil fuels whilst blocking the cheapest renewables to market.

“The Government has confirmed that there will be no new spending on renewable power beyond 2021 and there is a significant lack of clarity around the future of renewable heat and transport fuels. No long-term carbon price has been assigned, yet the Government is happy to directly financially support gas and diesel projects. That funding can be better used to drive innovation in the wide range of storage technologies instead.

“The clean growth plan talked a good game, but failed to walk the walk. We are in the bizarre situation where we are propping up fossil generation, but scaling back support for technologies that are cheaper, cleaner and will provide future proofed jobs. The government’s energy policy needs a complete rethink or we will be left behind with a dirty, antiquated and expensive energy system.”

—ENDS—

For more information or to request an interview, please contact:

Daniel Brown
External Affairs Officer
+44 (0)20 7981 0857
[email protected]

Notes to editors

• National Grid as Delivery Body has confirmed the T-1 Capacity Market Auction (for capacity to be delivered in 2018/19) provisional auction results.
• The unconfirmed clearing price is £6/ kW/ Year for those projects successful in the auction.
• The auction cleared in Round 14, on Thursday (01/02/18) with around 10GW of capacity bidding into the auction, and BEIS seeking to procure around 6GW.
• Around 100MW of storage projects received contracts, while around 700MW worth of capacity pre-qualified for the auction, but less storage projects (1.7% of the total successful) received contracts compared to the previous (T-4) auction for the same year (5.6% success rate), which illustrates the competitive nature of the auction but also potentially the impact of new lower ‘de-rating factors’ for storage projects bidding in the T-1 auction.
• The results are not yet confirmed by the independent auction auditor therefore details may be subject to change.
• The provisional auction results, published today, can be found here: https://www.emrdeliverybody.com/Capacity%20Markets%20Document%20Library/T-1%20Provisional%20Results%20Report.pdf
• Coverage of the Bloomberg New Energy Finance renewable energy data can be found in The Guardian here: https://www.theguardian.com/business/2018/jan/16/uk-green-energy-investment-plunges-after-policy-changeshttps://www.theguardian.com/business/2018/jan/16/uk-green-energy-investment-plunges-after-policy-changes

About the Renewable Energy Association (REA)

The Renewable Energy Association represents renewable energy producers and promotes the use of all forms of renewable energy in the UK across power, heat, transport and recycling. It is the largest renewable energy and clean technology (including energy storage and electric vehicles) trade association in the UK, with around 550 members, ranging from major multinationals to sole traders.

For more information, visit: www.r-e-a.net