Question

To ask the Secretary of State for Energy and Climate Change, what plans her Department has to increase electricity generation in 2015-16 and 2016-17.

Our priority is to ensure that British families and business have access to secure affordable energy supplies. We are working with National Grid to make sure there is always sufficient generating capacity available to meet demand even in challenging conditions, such as extremely cold weather.

National Grid forecasts show Peak demand for electricity for 2015/16 and 2016/17 is expected to be broadly stable, which is consistent with recent trends.

Since 2014 National Grid have had the ability to procure a Contingency Balancing Reserve and they have secured 2.4GW of capacity through this mechanism to ensure supplies for this winter.

On 15 October, Ofgem commenced its consultation on the extension of the cost recovery arrangements for the contingency balancing services to allow National Grid’s contingency balancing services to continue for the winters prior to the introduction of the Capacity Market in 18/19. National Grid’s Tender for the Contingency Balancing Reserve (subject to the outcome of the Ofgem consultation) opened on 2 November. The Government supports the position taken by National Grid and Ofgem that Grid should retain the ability to procure the contingency balancing services for the next two winters and that this tool will help ensure sufficient margins until the first delivery year of the Capacity Market.

Beyond winter 2017/18, the Capacity Market will take over as the long term solution for security of supply, driving new investment in gas and demand side capacity in the future. The first Capacity Market auction was successfully concluded in December 2014 and the next will commence on 8December 2015. We have announced our intention to procure a total of 47.9GW capacity for the delivery year 2019/20 and that the target capacity for the auction this December will be 45.4GW. The balance (2.5 GW) will be procured in 2018, one year ahead of delivery.