Yesterday, National Grid issued their first system emergency since 2012. We did some analysis and found the tight electricity margins were mainly caused by breakdowns at ageing coal power stations.
The UK's coal fleet is very old – only one coal power station is less than 40 years old – and this makes them susceptible to breakdowns. Coal is not helping keep the lights on: we need a plan on how to build new capacity to replace these ageing coal power stations.
At the moment the plan is the UK's new capacity mechanism, but this plan is not working. The first auction was last year, and the results revealed some critical flaws:
- New gas power stations are not being built. The one and only new gas power station accepted in the capacity mechanism last year has yet to agree financing, and is looking unlikely to be built.
- The capacity mechanism is paying to install a new fleet of dirty expensive diesel engines, crowding out cleaner, cheaper alternatives. These are small enough to avoid paying a carbon tax, and also to avoid strict pollution limits that apply for large power stations
- Even worse, the capacity mechanism is paying existing coal plants, £173m for 2018 alone, which means they will stay open longer than they could ordinarily, perpetuating the status quo.