In the seventh day of the Grand Committee debate on the Energy Bill, Baroness Worthington said: “Deciding to host the first auction in 2018-19 is not a technologically neutral decision; it is a decision designed to enable CCGTs to compete.”
She added the “lack technology neutrality” in the capacity market is exposed by the differing length of contracts being offered, citing 10 year deals for new CCGTs but only three years for existing plant that needs refurbishment.
“The confusion between a desire to be technologically neutral and these interventions is creating a great deal of uncertainty,” she said.
In the heated debate, Baroness Worthington also said the capacity mechanism could lead to a “windfall” for coal plants of up to £75 million per year.
She added: “If a plant that is considering a life extension can win a three-year contract, it will then receive between £150 million and £240 million in guaranteed payments,” which would significantly dent the UK’s chances of meeting its carbon emission targets.
Baroness Worthington was supported by the Conservative Lord Deben, who said: “If the mathematics stacked up, we might find ourselves supporting the very thing that we do not want to support.”
Baroness Verma, parliamentary undersecretary for energy and climate change, defended the government’s position on the capacity market by saying the Energy Bill will ensure decarbonisation of the energy sector without having “a profound effect on consumers’ bills”.
She added that the capacity mechanism was about ensuring security of supply “at least cost to consumers”, while “decarbonisation is best achieved through other provisions”, such as contracts for difference, the carbon price floor, and the EU Emissions Trading System.