The reset of energy policy announced last week was welcome. While the announcement that coal-fired power generation would end by 2025 grabbed the headlines, it is the commitment to encourage new gas-fired plants which will have the biggest positive impact on the sector and economy. It was recognition that current policies and incentives must be amended to meet the challenge of energy security.
ScottishPower has long argued that new gas generation is critical for our security of supply, and we have called on the Government to go further to address the various hidden subsidies that are distorting the capacity auctions and favouring dirtier and less efficient options.
To make new build gas achievable, we need a level playing field.
The energy we import from Europe on interconnectors is not subject to charges for using our grid system or for the carbon emissions released to generate that power. This means indigenous power is often less competitive than imported power. There can be up to a 20% differential – which contributes to new UK-based gas plant not being built. Small embedded diesel generators can also receive payments on top of the capacity mechanism that are almost triple the amounts larger power stations get.
ScottishPower recently received planning consent for a new gas-fired power station beside our existing plant at Damhead Creek. Initially the consent was for 1,200MW, but we have increased this to 1,800MW. We have prequalified this proposed new-build station in the capacity market auction, and we believe it could be built within 18 months, but only if the market conditions are right.
A level playing field will encourage UK generators to invest in the new gas-fired stations that we want to build, the Government rightly wants and the country needs.
Neil Clitheroe, chief executive, Scottish Power Retail and Generation