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(Bloomberg) — Gas-fired plants secured almost 60% of capacity in the UK’s latest market auction, underscoring their central role in the energy system even as the country pushes for cleaner power.
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The outcome of the auction — intended to ensure that enough capacity is available when solar and wind generation is low — highlights the government’s challenge in meeting its goal of decarbonizing the power system by 2030. The UK is likely to remain dependent on gas well into the next decade, as older nuclear plants retire and large-scale low-carbon alternatives remain limited.
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“The UK power system still needs gas plants for backup power and during times of low renewable power,” said Arhnue Tan, an analyst at BloombergNEF.
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About a quarter of the UK’s electricity is generated using gas, and the nation imports more than half of that supply. Britain’s persisting dependence on gas has been underlined by the conflict in the Middle East, with prices surging since the start of the month.
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Even if the government meets its target of generating 95% of its power from clean sources by 2030, gas-fired plants are still expected to operate in about a third of hours across the year, according to LCP Delta.
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Of the 40.1 gigawatts awarded, about 23.5 gigawatts went to gas units, while nuclear secured just 929 megawatts, a little over 2% of the total.
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With Hinkley Point C not expected to come online until the end of the decade, Britain faces a nuclear gap before new reactors begin replacing the retiring fleet.
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“Most existing nuclear power stations are reaching the end of their life and cannot be refurbished,” said Bertalan Geyes of LCP Delta.
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The auction for delivery in 2029/30 cleared at £27.10 per kilowatt-year, less than half the £60 per kilowatt-year achieved in last year’s four-year-ahead auction and slightly below market expectations.
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The result was “a small negative for UK generators,” said Ahmed Farman, an equity analyst at Jefferies.
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