Households will pay £990m in 2018 for the upkeep of coal power stations in order to avoid blackouts

Britainís ëBig Sixí energy firms enjoyed a lucrative Friday, as the Government announced that taxpayers will have to part with a collective sum of £990m to ensure that the nation doesnít lose power until 2018, with the majority of the money going to the renovation of old power plants which will provide reinforcement for existing renewable sources.

The Department of Energy and Climate Change (DECC) have overseen a capacity market auction this week, with energy companies being offered payments to keep certain power plants functional in case of emergency, with the DECC seeking to assuage fears that demand could outweigh supply regarding electricity by 2018.

The levy will amount to an extra £11.40 a year to the average household bill from 2018 onwards, and is being presented by the government as a wonderfully affordable price to pay for the assurance of no blackouts or bothersome power cuts.

Ed Davey, the energy secretary, said: “This is fantastic news for bill-payers and businesses. We are guaranteeing security at the lowest cost for consumers. Weíve done this by ensuring that we get the best out of our existing power stations and unlocking new investment in flexible plant.”

Despite this glowing report from Ed Davey, energy secretary, and his team, there is marked disgruntlement from certain sectors of society at the governmentís rationale for refurbishing old power plants with a disproportionate amount of the £990m, whilst investment in new plants seems minimal and cost-effective technologies appears to have been somewhat ignored.

Much has been made of ëdemand side management schemesí, which would see small businesses offered monetary incentives in return for monitoring their energy usage during peak times, and if executed diligently could lead to across the board energy savings. However, those endorsing such schemes only garnered 0.3% of the market.

The lack of investment in so-called ësmart technologiesí and demand management, in addition to igniting the ire of environmental campaigners, is made all the more murky by the governmentís renewed focus on old, polluting coal plants which reflects the governmentís all too cavalier approach to reducing the UKís carbon footprint.

With the number of environmental levies already imposed on these old coal plants, ostensibly in place to encourage their closure, people can be forgiven for seeing this contradictory stance as indicative of government erecting a house of cards built around them ëprotectingí consumers, when they are merely providing already rich energy companies with extra means of subsidising their high-carbon emission power plants, deepening the global warming conundrum.

ìGiving a cash bonus to already profitable power stations just to keep doing what they are already doing wonít make Britain more energy secure in the long term. For this to happen we need investments in a modern, smart, flexible energy infrastructure,î said Greenpeace UK energy campaigner Lawrence Carter.

ìThe majority of capacity has gone to existing plants, which is undoubtedly a cheaper and quicker short term solution to securing supply, but we still need to encourage investment in new plant to help meet the UKís future energy needs.î

EDF have emerged as notable winners of the auction, which incidentally is provisional with the final results being published by the DECC no later than 5 January 2015, taking up 16% of the capacity thus far.

A price of £19.40 per kW was agreed as suitable funding between providers and government, way down on the £75 kW price being thrown around at the start of the auction. Nuclear plants will be afforded £153m whilst under £50m will be provided for new capacity.

Jimmy Aldridge of IPPR, dismissed the auction as potentially trivial, stating: “The capacity market is a 20th Century solution to a 21st Century problem,”

“Rather than delivering windfall payments to big energy companies running old or polluting power stations, it should be incentivising the cost-cutting and low-carbon ësmart’ technologies that will keep the lights on into the future. The government should look again at how it ensures security of supply.”

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