(Adds names of bidders awarded agreements, government comment)
By Nina Chestney
LONDON Feb 3 Britain's auction to secure
back-up electricity generating capacity for the winter of
2017/18 ended with a very low price on Friday but appeared to
throw a lifeline to the big Eggborough coal-fired plant which
is due to close next month.
The auction cleared at 6.95 pounds per kilowatt (kW) per
year, National Grid said on its website, a record low.
Analysts had expected the auction to produce a price of
around 20 pounds, based on previous auctions which have settled
at between 18 and 22.50 pounds/kW/year. Experts say a price of
35-45 pounds is needed to attract new gas plant investment.
The government said in a statement that the low price
provided "guaranteed electricity capacity at a low cost to bill
Eggborough Power Ltd won a contract, which could extend the
life by one year of its 2 GW coal plant in Yorkshire that was
due to close this March. The company was not immediately
available for comment.
Other contract winners included SSE, RWE, EDF
Energy, Uniper and Drax Group.
A National Grid document showed a total of 54.4 GW of
capacity was awarded agreements. Around 4.85 GW exited the
auction above the clearing price.
Britain began capacity auctions in 2014, looking to head off
future power shortages as coal plants close and as investors
said there was little incentive to build new power plants.
The auctions reward successful bidders for keeping power
plants on standby so they can be called upon when renewable
energy production is low or demand is high.
(Additional reporting by Sangameswaran S in Bengaluru; Editing
by Greg Mahlich)