Tempus submits new evidence to support capacity market bias towards fossil fuels
Tempus has today lodged evidence with the European Commission from the UK Parliament Science and Technology Committee showing how technology has superseded policy design for keeping the lights on. The report, ‘Clean Growth: Technologies for meeting the UK’s emissions reduction targets, notes the increasing role of Demand Side Response (DSR), battery storage and decentralised generation in ensuring system resilience.
In the report Duncan Burt, Director of Operations for National Grid System Operator (which administers the Capacity Market), suggested that there was no technical reason why the Capacity Market could not make greater use of technologies such as batteries, interconnectors and demand-side response systems, without the need for diesel-powered generators.
The report says “Non-generation suppliers bidding for Capacity Market contracts should be eligible to bid for contracts of up to fifteen years, in line with new generation facilities”
By ‘non-generation’, the report means electricity customers’ assets – these customers are the very people who should be benefitting. But, under the current scheme, customers are paying for these measures through their electricity bills while participation is almost impossible.
Tempus wholeheartedly agrees with the fundamental principle that CM agreements of equal length should be available to all technologies, in order to provide technology neutrality and allow competitive price discovery. The only minor alteration to the Committee’s recommendation that we would suggest is that the maximum contract length for all parties should be limited to 5 years, because very long-term contracts can stifle competition and innovation.
The Clean Growth report has shone a light on the complexity of the task the EU Commission has to perform, directed by the courts, to fully investigate the Capacity Market during the 18 month Phase 2 investigation.
Sara Bell, CEO Tempus Energy, said
“That parliament should be at odds with the government does not seem surprising in the light of this week’s political events, but that BEIS itself is consulting about changes to the Capacity Market along the lines of those we have been fighting for in court, while still aggressively defending an opposing position in the High Court is absurd.
It is this which shows our long legal battle, fighting for a fairer energy system, is entirely justified – we must support a cleaner energy future for customers and the environment. We are confident that this will bring an end to the free handouts fossil fuels are getting from this ill-advised scheme.”
To demonstrate the power DSR brings to the UK energy industry we can look to the severe power outage event on 9 August, in which two centralised generators failed after transmission lines were hit by lightning. Demand-side resources (DSR) performed a vital balancing role and helped restore power to customers quickly and efficiently. This demonstrates the importance of ensuring that any security of supply measure, such as the Capacity Market, must facilitate and not hinder, the growth of DSR and storage.
Enforcing the judgment should be the responsibility of the UK government, but instead they have unlawfully continued with the scheme.
On 15th November 2018 the General Court of the Court of Justice of the EU annulled the State aid approval for the UK Capacity Market.
The Court held that the European Commission had been wrong to approve the scheme without a thorough investigation in 2014. The Commission has now been forced to carry out that investigation, which could take up to 18 months. The opening of this investigation was announced on 21 February. However, although the future of the Capacity Market is now in the Commission’s hands, this does not change the fact that the past subsidies have been rendered unlawful by the judgment.
The ruling in November created a ‘standstill period’ on the Capacity Market, and during this standstill the UK government has a legal duty to stop the scheme and recover the subsidies (aid) already paid out.
Sara Bell, CEO and Founder of Tempus said:
“We are astounded at the UK governments’ complete disregard for the law. Energy consumers should not be paying for these subsidies which have already been declared unlawful.”
“The decision to challenge the Capacity Market was not an easy one. It’s been a long and difficult battle to change this broken system. We have persevered because we know that we are right, the judgement on the 15th Nov only confirmed this fact and strengthened our resolve.
We stand on the side of consumers who are paying for an unlawful scheme that directly affects their health – not only is this morally wrong, but has now been found legally wrong, and we will enforce this ruling where our government has failed.”
The government has not been honest with investors and parliament. The legal basis for existing Capacity Market agreements has been withdrawn and the government has a legal obligation to return the money to customers. The government is desperate to give the impression that Capacity Market investments are safe. But they are not safe.
Anyone who believes the government’s assurances that the European Court’s judgment did not concern the nature of the scheme, I invite you to read that judgment, here is the link.
The capacity market design was rigged in favour of old-fashioned dirty generation, leaving cheaper, cleaner alternatives virtually unable to compete. A reform of the Capacity Market design will allow us to now reshape the market in order to bring forward investments in cheaper, cleaner technologies such as demand-shifting and battery storage in order to meet our climate targets and decarbonise as quickly as possible.
The UK government has been named the worst fossil fuel subsidiser in Europe, spending over €12 billion per annum on fossil fuel subsidies a recent EU report found. UK consumers and tax payers are forced to fund this pollution, shortening their lives and destroying the planet.
Bell said, “We only have one planet, one home. We need to work together to rapidly deploy technologies and commercial solutions in the interest of consumers so we can decarbonise as cheaply and quickly as possible. Our legal action will ensure this happens”