Page 22 - Gi flipbook August 2018

Protecting the future of gas plants

Construction of the Carrington
CCGT power station

principle for energy, which ensures MPB
that gas will be supplied to
households and essential services
such as healthcare, by neighbouring
EU members, in the event of a gas
crisis. If the UK loses access to this
benefit, it is likely that the UK gas
market will become more volatile and
susceptible to price gouging.
While the government had sought to
remedy this in the recent T-4 auction
by modifying the weighting criteria for
different energy generation systems,
the final auction results demonstrate
that further changes are required. MPB
PUBLIC PREFERENCES of high demand. Is this proof that viability, the auction system ought to
But the blame cannot be laid with the suppliers no longer view large scale operate in a manner that promotes its
T-4 auction system alone, as public generational capacity as necessary, or growth and success. The fact is that it
perception and government preference is this purely a business decision by currently completely fails to do this.
has equally created a number of Centrica, to move into a sector of the Fundamentally, the government’s
barriers to the success of new build gas market with larger margins? capacity auction market scheme has
plants in the UK energy market. Perhaps failed to provide the market
most damaging is the current consumer A SUSTAINABLE FUTURE? conditions necessary to construct
and government preference for The T-4 auction quite simply does not large-scale gas plants. The
renewable energy sources and small, provide a long enough contract for government needs to carefully
lithe, agile forms of energy generation gas plants to generate the returns consider whether the flexibility of
to supplement and protect from that investors demand; it seems interconnectors, demand-side
renewable-associated intermittency. absurd that surety of supply for the response and small, agile power
Centrica, the parent company of UK’s principal energy source requires plants can offer the security of supply
British Gas, which held close to developers to contract on high-risk, large-scale gas generation capacity
one-third of the UK’s gas market share low-reward, loss-leading contracts. A has demonstrated for decades. ■
in Q3 2017, according to recent Ofgem significant part of the overall
statistics, started to sell all its large economics of CCGT is reliant on the ■ DWF LLP is a multinational law
central power stations in 2015 to focus capacity market. So, if the firm headquartered in Manchester
on smaller, flexible energy plants that development of CCGT is reliant on with 30 offices across the world.
generate electricity only during periods the capacity market for economic For more information visit uk.dwf.law

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