We have just removed £5.6 Billion worth of state-aid from the Capacity Markets. Where was this money going?
Tempus Energy challenged the structure of the capacity markets before the first auction even began. This is because we could clearly see the rules were skewed in the favour of polluting fossil fuel generation - four years’ worth of auctions since then have displayed the effect of this oversight.
With £5.6bn committed, almost £4.2bn went to fossil fuel generators, around 74% of the total.
Almost £800m of these payments were to fund new and existing peaking plants around the country. The vast majority of these peaking plants run on diesel, contributing to both climate change and the air pollution which leads to deaths of up to 40,000 a year in the UK.
It is not for a lack of alternatives; analysis of the capacity auction market data shows that polluting technology was incentivised over demand side response and storage programs.
A properly designed Capacity Market will fairly incentivise clean, green technology solutions at least as much as it incentivises the extension of old coal and new build of diesel.
Capacity Market in PJM boasted 6% DSR involvement for 2018-19, while the UK saw only 2%. Tempus wants to see a competitive and open market - which allows alternative technology investment to help security of supply and solving climate change. This is the only way to have an efficient, cheap and green energy market.