The department of energy and climate change (Decc) has offered little comfort to operators of diesel generators hoping to earn capacity market contracts.
Its consultation response states that the department of environment, food and rural affairs (Defra) is working on strict rules to limit hours of diesel generators, which it said would come into force ahead of European legislation (the Medium Combustion Plant Directive). It added those rules were “unlikely to include blanket running hour exemptions permitted by the MCPD”, suggesting the legislation could be more stringent than required by EU law.
“The government believes the steps being taken by Defra sends a clear signal on the long-term viability of investing in generation that may be leading to localised pollution,” the response states.
“In relation to the call for controls on diesel to be established within the capacity market itself, the government notes the importance of maintaining the principle of technology neutrality,” added Decc.
However, there was some acknowledgement that any plans to remove benefits for embedded generators may require more thought.
Some respondents said that removal of the benefit could see UK industrial firms, reliant on embedded benefits relating to their CHP engines, potentially go bust.
Others suggested that the review is likely to lead to a hiatus in investment until it is complete, noting this may be the Government’s intention.
Decc said the review – being handled by Ofgem – required further scrutiny and that transitional arrangements may be required.
See the consultation response here.