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Energy Supply: Subsidies

Department for Energy and Climate Change written question – answered on 25th January 2016.

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Photo of Alistair Carmichael Alistair Carmichael Liberal Democrat Spokesperson (Home Affairs)

To ask the Secretary of State for Energy and Climate Change, what projections her Department has made of the subsidies existing fossil fuel generators will receive through the Capacity Mechanism.

Photo of Andrea Leadsom Andrea Leadsom The Minister of State, Department of Energy and Climate Change

We do not subsidise fossil fuel generators, any fuel type can participate in the Capacity Market as the scheme is technology neutral. Auctions in the Capacity Market are competitive to ensure best value.

Capacity market payments to be made to existing fossil fuel generators are £559m from 2014 auction and £714.3mfrom 2015 auction (both in 2015 values).

The Capacity Market is designed to ensure we take account of low carbon technology supported through other Government schemes before calculating requirements; this ensures we get the most out of existing generation, bringing on new capacity when required. Capacity market payments are to provide missing money in the energy market and are not a subsidy. Capacity providers will also face heavy penalties if they fail to deliver energy when needed.

The purpose of the Capacity Market is therefore to make sure we keep the lights on, while providing best value to consumers.

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