UK capacity scheme to subsidise gas, nuclear, coal

Power demand reduction has fared poorly in the first round of the UK’s scheme for “keeping the lights on”, with gas, nuclear, coal and biomass plants taking the lion’s share of the subsidies.

Combined cycle gas turbine (CCGT) plants will be the main beneficiary of the UK capacity market, the first major subsidy scheme of its type in the EU, with 47 new and existing plants making up 45% of subsidised capacity.

Demand reduction schemes make up less than 0.4% of capacity awarded subsidies, after struggling to compete in the auction through which the subsidies were awarded, data published on Friday showed. Over 70% of demand reduction capacity that entered the subsidy auction could not meet the clearing price of £19.40 per kilowatt hour per year.