Question

To ask Her Majesty’s Government, further to the Written Answer by Lord Bourne of Aberystwyth on 2 November (HL3058), whether the measures taken to counter the loss of generating capacity resulting from the closure of coal fired power stations will include (1) the use of small diesel generators, and (2) the closure or interruption of industrial production by industry to maintain security of supply during the coming winter; and what is their estimate of the extra costs of those measures to energy consumers and taxpayers.

The operators of Ferrybridge and Longannet power plants have announced plans to cease generation in 2016 while the operator of Eggborough plant is currently consulting staff on possible closure. These announcements relate to closures from March 2016 and do not affect security of supply this winter.

Our priority is to ensure that British families and business have access to secure and affordable energy supplies that they can rely on. Since 2014 National Grid have had the ability to procure a Contingency Balancing Reserve (CBR), which consists of the Supplemental Balancing Reserve (SBR), where existing power stations stand by ready to generate additional electricity and the Demand Side Balancing Reserve (DSBR) where companies bid for contracts with National Grid to receive payments in return for reducing their electricity usage times of peak demand should National Grid so require. National Grid and Ofgem agree that we should retain the ability to procure CBR for the next two winters. Government supports this position and we expect confirmation later this month following an Ofgem consultation.

Organisations contracted under DSBR can reduce their use of grid electricity in many ways while still remaining in operation. For example, an industrial customer could switch to a back-up generator or a supermarket chain might raise the temperature slightly on its refrigerators for a short time, using less energy but maintaining safe refrigeration levels.

National Grid’s CBR is tendered competitively keeping procurement at the lowest possible cost to consumers, whilst ensuring electricity security. The additional reserve capacity that National Grid has purchased for 2015/16 represents less than 50p a year on the average annual consumer bill.

From winter 2018/19, the Capacity Market will take over as the long term solution for security of supply. The Capacity Market is a key part of our reform of the electricity market and it will drive new investment in gas and demand side capacity to help keep the lights on, as well as getting the best out of our existing power stations as we transition to a low carbon electricity future. Small-scale flexible generation such as diesel can also bid into the Capacity Market – generation that can turn on quickly has a small but important role to play in securing our electricity system. It is typically run for short periods to meet peaks of demand or local system constraints, so emission impacts can be relatively limited.