Defra outlines emissions control plan ahead of capacity auction


lowemissionzoneDefra has outlined proposals to take “quick action” to curb emissions from diesel generators – ahead of the next capacity market auction in December.

Diesel generators operating or planning to operate for more than 50 hours a year look set to be affected, a limit which has been given a cautious welcome by industry.

Around 1.5GW of new gas and diesel generation is prequalified for that auction. Defra has previously warned that its proposals to create stricter legislation than the EU MCP Directive – and implement it sooner – could have a direct bearing on their revenues if they are not yet operational.

“Investors bidding for new capacity into the Capacity Market auctions in 2016 should be aware that installations with a thermal input less than 50MW that become operational after the publication of proposals are likely to be directly impacted when the legislation comes into force,” stated the department last summer.

Defra has now issued a consultation stating that it plans to go beyond the EU’s Medium Combustion Plant Directive (which covers generators between 1MW and 50MW and would affect new plant from 2018) and change Environmental Permitting Regulations to introduce emissions controls for generators. The new rules would come into force in January 2017, although the consultation doesn’t actually end until 8 February.

“Quick action is needed to ensure that any generators with high NOx emissions which are not yet installed and in the future secure energy supply agreements, are required to control their emissions – and the next opportunity to secure such agreements is the Capacity Market Auction scheduled for December 2016,” states the department in the consultation document.

“Timing is of paramount importance. Estimates of the number of small scale generators that have prequalified for December’s Capacity Market auction suggest, at the higher end of the range, there is a risk that the growth observed to date could continue unless action is taken. It is important to establish controls on NOx emissions from these generators now to ensure that any growth does not lead to air quality problems,” it continues.

“Moreover, the proposed controls are an important step in removing, before the auction, an unfair advantage from which these generators benefit i.e. unlike larger generators, they are not currently exposed to costs arising from having to limit their emissions. As a result we are consulting early on the broad principles for regulation while seeking further evidence to develop our analysis.”

Defra says its modelling suggests multiple generators (up to 49.9MW) operating at a single site, such as diesel farms, are unlikely to breach rules provided they operate for less than 50 hours a year and are 150m away from people.

The department is also proposing some transitional arrangements for generators in operation before 1 December 2016, those with capacity market contracts for new capacity from 2014 and 2015 auctions and plants for which a Feed-in Tariff preliminary accreditation application has been received by Ofgem before 1 December 2016.

The department seeks views on its approach. See the consultation document here.

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