Gas developers are gearing up to bid into the first capacity market auction in December and build new plant by winter 2018/19.
However, Davey told the Energy and Climate Change Select Committee new plant were not expected to get contracts until next year.
Davey said: “Our expectation in the first capacity market auction is that we will see plants that are currently mothballed, or plants that would otherwise close, coming forward. It might not be until the second capacity market auction at the back end of 2015 that we may need new plant to come forward to be built.”
The remark, dropped into a parliamentary inquiry into the unrelated December power cuts, sent ripples through the industry.
ESB is building a gas-fired plant at Carrington, which will be classed as “new” for the purposes of the capacity market. Michael Dodd, GB regulation manager, said he was “surprised” at Davey’s comment.
Intergen plans to bid two gas power stations into December’s auction, according to European general manager Mark Somerset. Waiting until 2015 could mean losing out on favourable contracts, he said: “The longer the delay, the higher the cost.”
The Capacity Market is subject to state aid approval from the European Commission, which could take months. The Department of Energy and Climate Change (Decc) will not confirm the volume of capacity to be procured until it gets the go-ahead from Brussels. Industry figures have warned that could delay the auction process.
A Decc spokesperson said: “We want to see both mothballed and new plants participate in the first capacity market auction.”