Coal-fired generator qualifies for UK standby power list

Coal-fired power producer, Drax, and French energy group, EDF, have qualified for a UK scheme to reward power companies for keeping plants on standby, officials announced on Friday.

The UK's Centrica is also among the companies that have won approval to take part in Britain's first electricity capacity auction, to be held in December.

The auction is one of several so-called capacity mechanisms that countries across the EU plan to avoid supply crunches and provide back-up on grids with growing proportions of intermittent electricity supplied by wind farms and other renewable generators.

But Greenpeace, the environmental campaign group, criticised the capacity payments as likely to be used to extend the life of coal plants, whose greenhouse gas emissions are a leading driver of climate change.

"These handouts look very much like the 'perverse fossil fuel subsidies' lambasted by David Cameron at the UN climate summit in New York last week," said Lawrence Carter, Greenpeace UK energy campaigner. "No wonder they waited until 6pm on a Friday to bury the bad news."

Successful bidders in the UK auction will be paid a price set in the competition for keeping their plants on standby from the winter of 2018-2019.

The energy secretary, Ed Davey, has said the scheme is likely to add about £2 a year to an average household fuel bill.

The UK is expected to lose up to a fifth of its generating capacity in the next few years as ageing nuclear plants and coal power stations are retired.

That has prompted warnings from the energy regulator, Ofgem, that the cushion of spare power capacity over demand will fall to as little as 2 per cent by the winter of 2015-16.

The capacity auctions are aimed at encouraging energy companies to fill the gap, mainly by building new gas-fired plants, which can be turned on and off quickly to back up supplies when the wind does not blow or on cloudy days when solar farms generate less electricity.

Figures supplied by National Grid late on Friday suggest that of the 62.5 gigawatts of generating capacity approved for the scheme, about half is from gas plants and less than a quarter from coal power stations.

One coal-fired plant operator, ScottishPower, said it had decided to exclude its Longannet power station from the scheme, largely because it faced "disproportionate transmission charging penalties.

"The company cannot justify entering the plant into a process which will not come into force for four years and will then only offer 12 months of certainty.

"Simply to reach the 2018 delivery year, Longannet needs to pay over £120m in transmission penalties. In comparison, if Longannet was located in the London area, the station would receive a fee of £4m per year to stay connected."

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