Profiteers or keeping the lights on? The power plants that make millions a day | Energy industry

The gray mass of travel and a gas power plant 18 miles north of London appears near the Rye House train station in Hertfordshire.

Rye House Energy Station has produced electricity since 1993, which has made the UK’s longest energy power plant still on the market. But it also produces some of the most expensive electricity in the country.

The electrical power plant, which belongs to a subsidiary of the Giant Vitol, called for record -high payments to produce power when electricity has been insufficient in recent years, raised its eyebrows.

In the winter of 2022, months after Russia’s occupation of Ukraine, Rye House, Rye House, demanded £ 6,000 for every Megawatt clock it produces. The UK electricity market prices are usually between £ 60 to £ 100 per hour megawatt.

In January, Rye House was one of the two power plants, each paid more than 6 million pounds to run the gas turbines for several hours during the freezing air spell.

Payments provoked anger from climatic campaigns and consumer groups, which urged the government to accelerate the plan to reduce its confidence in gas power to only 5% of its electrical system.

When the electricity supply is shortened, the National Energy System Operator (Neso) encourages energy companies to offer prices that they will be ready to strengthen their facilities under the system to balance England’s network.

But like it, whether you like it, to stay here for a predictable future of gas plants. According to official estimates, they will be asked to help keep the lights open at the end of the decade, and it is possible to increase the payments required to make these facilities economically throughout the financial year.

A price worth paying?

The VPI, the owner of Rye House, believes that the high costs of the facility are a price worth paying. The company justifies surprising payments per Megawatt-Saat by pointing to the cost of maintaining the facility for a large part of the year. The power plant is kept in protection mode during the summer, which is still a period in which the facility is still exposed to some costs but does not earn money.

The rapid carbonform of the UK’s electricity generation, where the last coal energy station in Ratcliffe-on-Soar in Nottinghamshire was closed a year ago, made the grill more unstable. Gas plants and large, rotating turbines are required to ensure fever that cannot be made by wind and solar energy, which helps to keep the frequency of the grill constant.

High -level industrial executives warned that companies such as VPI cannot meet their costs and if they cannot make a justified profit, that the UK may syllab the closure of old gas power plants, which will lead to higher costs for consumers if it needs to be built to replace new gas facilities.

To protect against this, the government’s capacity market mechanism was designed to secure the future of the UK gas plants, even if the country moves away from fossil fuels. Energy companies should compete for contracts that meet the cost of keeping power plants in waiting when they need. Separate auctions offer contracts to gas plants one year in advance or four years in advance.

The competition between generators to prepare a contract keeps the auction costs as low as possible, because the lowest bids are the winning offers. Therefore, to make a profit, gas generators need to complete these gains by selling electricity to the market.

Rye House runs only 5-10% of the time, so the opportunity to make a profit is limited. In the future, as the UK progresses to the low carbon energy system, many other gas generators will find themselves in the same position.

‘Fire-fighting’

According to Tom Glover, RWE’s boss of England business, there will be higher prices throughout the exchange capacity market. RWE is the UK’s largest gas generator and is also one of the country’s largest renewable energy investors. Plants work more frequently, that is, they do not call for “famine prices önemli equally with those earned by Rye House.

“These have been discussed for years, Gl Glover said. Twenty -five years ago, everyone thought it was just the right economic signal that should be sent to rely on famine pricing. Over the years, we begin to realize that no one wants to accept the price of 1000 £ 1000/MWh as fair.

“We become the fire department of the energy system,” he added. “You should pay for the fire department to be always.

Despite the controversial success of the UK’s capacity market, concerns about whether gas generators have made fair profits, made new suggestions to reform the system. At the beginning of this month, research by an old government Energy Mandarin found that the government could save £ 5 billion per year by overhauating the electricity market by removing gas plants.

Adam Bell, former President of the Government’s Energy Safety and Net Zero Department, argues that the UK’s gas plants should be kept on a strategic reserve that can be fired when necessary without disturbing the total cost of electricity in the wholesale market.

The report, assigned by Greenpeace, suggested that gas facilities should no longer sell power in the open market, and instead should not provide a strategic electrical reserve at a price agreed when they need to ignite.

A high -level industry source said that although gas generators are willing to combat the British energy -rearched crisis, the probability of winning private companies is low. A second source described the proposals as “economically illiterate”.

The critics of the plan believe that reducing the volatility in the electricity market will weaken the necessary incentives to release the batteries or to pause their demands when energy users are short.

However, according to Glover, there may still be a place for more discussion on reform in the market. “We want lower consumer prices, we want lower gas energy production, we want more renewable energy. We want to work with them to achieve the goal we all try to reach, but perhaps more understanding about the market,” he said. “There are different ways to reach there.”