On May 6th, the UK Government published the final results of the recent Capacity Market consultation. This plan ensures that the country maintains a constant supply of electricity by using emergency backup systems when needed. This is particularly important at peak usage times or when renewable energy sources are intermittent.
What is the Capacity Market?
Over the past 12 months, the UK Prime Minister, Sir Keir Starmer has set major goals to make Britain a clean energy leader. These plans involve two main targets:
1. Generating 100% clean electricity by 2030
2. Reaching net-zero emissions faster
However, while aiming for these green targets, the UK must still be able to keep its electricity supply reliable. This is particularly important during periods where renewable energy levels drop because of imperfect weather conditions. The Capacity Market is an agreement that pays energy providers to ensure a supply is always available especially during periods of high demand.
By 2030, the aim is for all the electricity used in a typical year to come from clean energy sources. As, renewable energy sources like wind and solar can be unpredictable, flexible backup power is needed. Fossil fuel powered plants often provide this; temporarily plugging the gap to meet public demand, especially during peak periods.
Capacity Market Proposals and Agreements
Between 15th October and 10th December 2024, a range of 41 diverse stakeholders that included energy generators, developers, universities, not for profit charities and trade bodies were invited to give feedback on proposed updates to the Capacity Market.
During the consultation, the participants proposed and agreed upon three major points. These are:
- Providing Greater Support for Aging Power Plants Through Life-Time Extensions:
The plan includes upgrading older power plants so they can provide backup power. To help them do this, the Government will lower the refurbishment cost threshold from £170 to £65 per kilowatt in 2025. This threshold will then increase yearly in line with inflation. To qualify for this, plant directors must state that the investment is for real upgrades, not just regular maintenance.
- Decarbonisation Plans for New Power Plants:
Starting in 2026, new gas or combustion plants must have clear plans to be environmentally friendly. They cannot operate without this. Greener options may involve switching to using hydrogen or carbon capture technology.
- An Exit Option for Gas-Powered Plants:
Existing gas-fired plants can switch from being part of the Capacity Market to a new agreement. This includes options such as the Dispatchable Power Agreement which supports decarbonisation efforts.
Powering a Future Cleaner, Greener UK Network
To support the greener power transition, the UK will roll out flexible low carbon technologies. These include:
- Power with Carbon Capture (power CCS) – This aims to prevent the CO2 produced in power stations from being released into the atmosphere. Instead, the gas is captured, transported, and stored deep underground.
- Hydrogen-powered electricity (H2P) – Hydrogen is a cleaner natural gas; it doesn’t release carbon dioxide into the atmosphere when burned.
- Long-duration battery storage (LDES) – Batteries will provide a stable power supply if there are fluctuations in the electricity grid.
This advanced engineering will eventually provide future backup power in a cleaner way. But for now, until these new clean technologies are fully ready, the UK will keep using some gas-fired power plants to help keep the power supply stable. Experts estimate that these will provide around 35GW worth of emergency backup when needed.
As there are still important Net Zero targets to meet, these gas plants will be used less often and mainly only serve as backup during high demand times.
What does the Capacity Market mean for UK Households?
This is reassuring news for UK householders. The Capacity Market agreement holds the energy industry accountable – not just to provide a cleaner, greener power supply that is better for the future of our planet, but one that must also be stable enough to meet consumer demand. Even in the most unpredictable of times!
At Energy Advice Helpline, we believe it’s important to explain complex government and energy company rules clearly. We want to make them easier to understand for everyone. After all, these important decisions affect our lives now and in the future – impacting not just our homes and communities in the UK, but the whole world too.
It’s good to know that plans are being made to ‘keep the lights on’, while still lowering pollution for a healthier environment. A more stable and greener power network will also hopefully lead to less future energy price rises and fuel poverty.
Government Grants That Support a Greener Power Network
If you live in a property with an EPC rating of E to G, you may qualify for free home upgrades with ECO4 or the Great British Insulation Scheme. So, why not become part of the UK’s green revolution today? Click the button below to see if you’re eligible!
