In December’s capacity auction, £176 million worth of 15-year contracts were awarded to small scale diesel generators – a substantial increase on the previous year’s total of £109 million.
Dave Jones, policy analyst at environmental campaign group Sandbag, warned that without changes to energy policy, a further rise could occur in the third capacity auction.
He said: “There’s very much a kind of momentum from people suddenly realising the investment opportunity for diesel.
“There’s no reason this couldn’t snowball and we end up with even more being contracted in next year’s capacity mechanism.”
Read Utility Week’s analysis of the government’s diesel dilemma here.