The government is facing demands for an urgent investigation into the fact that companies were given more than £175m in subsidies to build heavily polluting “diesel farms” in order to provide back-up power for the UK.
Critics of the decision say that the money is rewarding intensive carbon dioxide emitters, just as Britain has promised to lower carbon emissions at UN climate talks in Paris.
The National Grid confirmed that it has secured 45 gigawatts of back-up power, the amount it needs to meet peak periods of commercial electricity demand from 2019 onwards. A price of £18 per kilowatt-year was agreed with gas, nuclear and diesel bidders, a price slightly lower than the first auction last year.
The Grid also published details that showed contracts had been made to build 650MW of diesel-driven capacity at a cost of £175m.
“The UK’s [power auction] is a complete shambles. We’re spending money on all the wrong things and as a result the right things are not happening,” said Bryony Worthington, a Labour life peer and founder of the organisation Sandbag, which campaigns to reduce CO2 emissions.
“There should be an urgent investigation into why it’s gone so badly wrong with reforms introduced in the energy bill, which will arrive in the Commons in January,” she added.
The Renewable Energy Association also supported Ms Worthington’s call for an investigation, saying that greener technological solutions were losing out.
Despite winning half of the contracts on offer, gas-fired power station owners did not put forward any plans to build new gas facilities as the government had hoped.
There were also many coal-fired power deals made, despite promises by the government that coal would be phased out.
Energy minister Andrea Leadsom weclomed the results of the auction however, saying that “fierce competition in the capacity market has driven down costs, meaning future capacity has been secured at the lowest price possible.”
Shadow energy secretary Lisa Nandy, disagrees. She said the government needs to scrap the new policy, saying it has “failed in its purpose of attracting investment in new power stations. Instead hundreds of millions of pounds will be paid out to big energy companies to keep open old power stations that would have been open anyway.”
Dustin Benton, head of energy and resources at the Green Alliance thinktank, praised Amber Rudd for planning to phase out coal and said that her next step should be to reform Britain’s outdated capacity market.
“Continuing to give hundreds of millions of pounds to coal is perverse and unnecessary,” he said.