Energy Users Face A Subsidy Bill To Keep Energy Generators Running

October 10th, 2019

In a subsidy auction some energy companies won subsidies of £15-£20 per KW, meaning an extra cost to the consumers of at least £750m per year.

The Department of Energy and Climate Change commented, “This will encourage the investment we need to replace the older power stations and provide backup for more intermittent and inflexible low-carbon generation sources”. It seems the funds will be used to renovate and modernise the current power stations to avoid them closing.

The auction run by National Grid effectively guarantees at least 48 GW after the year 2018. The scheme offers 15 year contracts to firms that guarantee new plant construction , with 3 year deals for renovation of existing plants and 1 year contracts for demand reduction.

The WWF charity notes that if the price had closed at the opening level of £75, EDF which owns 8 power stations would have received a £3.3bn windfall from the subsidy scheme.

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