By Paul Homewood
The latest capacity market for 2024/25 gives us a good insight into what grid capacity will look like in four years time when all the coal power stations will be gone.
This year’s auction has awarded contracts for 40.8GW of capacity, which is in addition to 6.7GW awarded 15 year contracts in earlier auctions. Most of the latter appears to be small scale diesel/gas engine generation and storage.
Of the 26.4GW gas capacity, there is only 0.9GW of new build, consisting of three OCGT units being built by Drax in Bedfordshire, S Wales and Suffolk. There is also 0.7GW of refurbished capacity.
For some reason, 1.5GW of nuclear capacity at Torness and Dungeness exited the auction, unable to bid down. This may suggest concerns about their future. Both are due to close by 2030 anyway.
If we add in the new capacity due at Hinkley Point, we will have about 32GW of reliable capacity available late in the decade. Quite clearly this is woefully short of what is needed. We will obviously be desperately dependent on the interconnectors by then, but even these won’t be enough.
The small bits of storage and demand supply response are only useful for an hour or two at times of peak demand.
The only other capacity we will have to call on will be diesel and gas engines, but how reliable will they be? Even though they have 15-year contracts, how many will actually be operational in a few years time? Many of them appear to be owned by tin pot companies, no doubt out to make a quick buck. Indeed, a quick scan revealed two of these companies went bust in 2016, a year after winning contracts. One could easily see a situation where maintenance costs after a few years make them uneconomical, particularly if power prices stay low.
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March 25, 2021 at 06:48AM