Posted on: 29/01/2019
Lawrence Slade, Chief Executive of trade body Energy UK, has thrown his weight behind the UK Government’s efforts to reinstate the Capacity Market (CM).
The mechanism was suspended late last year after the European Court of Justice ruled the European Commission hadn’t followed the correct procedure when granting state aid approval.
Slade said: “Finding that £1 billion of apparently guaranteed income – upon which both the operation of existing plants and new developments (including DSR and battery storage) are dependent – has suddenly disappeared not only jeopardises security of supply, particularly next winter, by putting operators – and let’s not forget jobs and livelihoods – at serious risk but threatens to be something like the final straw for investor confidence."
“I firmly believe that it is the interests of all those in the energy market – and those whom it supplies – that the CM is reinstated and as such Energy UK will be supporting BEIS to achieve that as soon as possible.”
Slade said it would be a “sensible move” to restart collection of CM payments from suppliers to stop them mounting up.
Such a move would provide clarity he said for suppliers facing the dilemma of whether to carry on collecting payments from customers or not.
Suggestions to remove payments from customers’ bills were “somewhat hasty”, he said.
He said restarting payments would also provide reassurance to suppliers that they will be paid for fulfilling their commitments under their previous CM contracts.
Slade said that the CM “isn’t perfect” but praised it for keeping “the lights on at the lowest cost”.
The CM has forced electricity providers to become more efficient than was thought possible, he said.
“There’s no reason why the CM can’t continue to support the transition to a low carbon future by being technology neutral and including renewables,” he added.