Companies will today bid for government subsidies to
ensure power plants are available at the flick of a switch, as part
of the new capacity market. The market is designed to ensure the
lights always stay on, even when demand is high and the weather
means renewables aren't generating electricity.
Under the scheme, power providers are paid to be
available when the National Grid needs them. But it's not yet clear
which power stations will be included in the scheme. That's
important, as it will determine how much coal, gas, or oil gets
burned for power generation, and what the impact on the UK's
emissions will be.
The capacity market's first auction begins this
morning. We explain how the market works, and how it fits with the
government's wider energy and climate change policy goals.
Making a market
electricity demand is gradually reducing, the UK's peak demand
isn't shrinking much, and is set to remain at around 53
The UK has lots of old coal, gas and nuclear power
plants. As they age, they get more prone to breaking, so if the
power companies don't want to invest millions in upgrading them
they usually shut them down.