UK gas plants in line for large windfall payments to keep lights on this winter

More UK gas plants will be in line for windfall payments to help keep the lights on this winter after generators received multimillion-pound payouts last winter.

Britain’s energy system operator expects the UK’s winter power supplies to reach their highest level in five years, in part due to a rising number of gas plants willing to generate electricity during the colder months.

Gas plants are typically called on to generate electricity when wind and solar power are in short supply. During still winter periods when freezing temperatures drive demand for energy higher, they can often request large fees to fire up their generators.

In early January this year, two gas power plants in Hertfordshire and Flintshire, north Wales, were paid a total of £17.8m to run their gas turbines between 4pm and 7pm when demand for electricity was forecast to reach its peak.

The payouts, which were up to 100 times higher than normal market prices, ignited concerns within the industry that gas power plants were able to command excessive payments to generate power when renewable energy generation drops.

They were particularly high because several generators extended their planned outages or scheduled new ones when demand was low during the mild Christmas period before a sharp turn in the weather drove demand up again.

The higher number of gas plants available for the winter ahead does not necessarily mean that the power system will rely more heavily on gas power – or that record high payments will be paid to those which do run.

The the Energy System Operator (Neso) instructs which of the available power plants, batteries and renewable energy projects will generate on a given day in order to maintain a balance between supply and demand.

In the winter ahead the UK will also have greater access to electricity imports after the launch of the Greenlink power cable connecting the UK grid to Ireland, and more battery power, according to the Neso.

It said the extra power supply options would more than offset the expected rise in peak power demand forecast for the winter ahead compared to last year.

Deborah Petterson, a director at Neso, said: “Our early view of the winter ahead shows a positive outlook with sufficient margins throughout the colder winter months.”

The system operator is also confident about energy supplies in Europe, which it found would be “adequate” for the winter months.

“We will continue to monitor developments in global energy markets, remaining vigilant in our preparations to ensure that the resilience and reliability of the electricity network is maintained,” Petterson said.

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Ed Miliband, the energy secretary, said on Tuesday: “We only need to look at the events in the last few days to see that we’re on this rollercoaster of fossil fuels.”

The government has pledged that the UK’s electricity system will run on 95% low-carbon power sources by the end of the decade, with gas plants held in reserve as backup when needed.

Miliband dismissed concerns that the industry would fall short of the 2030 target. He told journalists on the sidelines of an offshore wind industry conference that the target had “always been stretching and achievable – and it is absolutely achievable”.

At the same event he warned that the government would “win this fight” against critics of Britain’s net zero plan, in part by creating more offshore wind jobs in the former industrial heartlands where Reform UK has gained support.

He said: “The forces that want to take us backwards, the forces that oppose net zero, will have to reckon not just with the government. They will have to reckon with all these companies that are creating jobs.”