Draft Electricity Capacity Mechanism (Amendment) Regulations 2024

Andrew Bowie Excerpts

Tuesday 7th January 2025 General Committees

[Andrew Bowie (West Aberdeenshire and Kincardine) (Con)]

It is a pleasure to serve under your chairmanship, Mr Efford. Good morning and happy new year. It is good to be back in this Committee dealing with yet another piece of delegated legislation.

The draft regulations make changes necessary for the operation of the capacity market outwith the EU and sensibly revokes the 10-year approval requirement. On that basis, I do not oppose it and we will not stand in the way of business today.

The capacity market scheme was introduced in 2014, as part of the electricity market reform, to ensure security of electricity supply by providing payments for reliable sources of electricity generation capacity, or in some cases for reduced demand. In 2013, the Government identified that while introducing renewable energy sources into the energy mix,

“The amount of gas capacity we will need to call on at times of peak demand will remain high, with potentially significant amounts of new gas generating capacity required by 2030.”

That prediction rings true, and truer still when we acknowledge the intermittent nature of weather-dependent renewable energy sources such as wind and solar. That is why in a speech made at Chatham House in March, the shadow Secretary of State, my right hon. Friend the Member for East Surrey (Claire Coutinho), called for new unabated gas power plants, to make sure that we can keep the lights on when the wind is not blowing and the sun is not shining.

As the NESO report states:

“Around 35 GW of unabated gas (broadly consistent with the size of the existing fleet) will need to remain on standby for security of supply. This requirement for gas capacity will remain throughout the early 2030s until larger levels of low carbon dispatchable power and other flexible sources are able to replace it.”

Indeed, its “Clean Power 2030” plan sets out the intention to reform current market mechanisms such as the capacity market to

“help enable the continued operation of unabated gas for security of supply.”

This will, however, be more expensive due to the sporadic use of gas as a result of the dominance of renewables. The capacity market will provide income to combined cycle gas turbine plants, which will produce only 5% of overall generation, requiring much higher capacity prices.

As the Secretary of State charges toward grid decarbonisation, it is imperative that we retain our capacity for gas generation and maintain the capacity market scheme to facilitate that, but due to the decisions made by the current Government it will be more expensive —one of the many pitfalls of their “renewables at any cost” approach. I am sure we will soon debate this at greater length and in greater detail; it is not for today’s Committee. We have no problem with the specific provisions of the draft regulations before us.