March 20, 2019 / 12:24 PM / 6 months ago

Uniper says UK capacity market suspension could drag into 2020

LONDON (Reuters) - Suspension of a scheme paying billions of pounds to utilities in Britain to provide back-up electricity could drag into 2020, the UK head of German power company Uniper said.

FILE PHOTO: Uniper's Staudinger coal power plant at sunrise in Grosskrotzenburg, 30km outside Frankfurt, Germany, February 13, 2019. REUTERS/Kai Pfaffenbach/File Photo

A European Union court ruling last November forced Britain to halt payments under the scheme pending a review, a decision which hit shares in British power companies.

The scheme, known as the capacity market, pays power generators to be available in times of high demand.

Uniper owns more than 6 gigawatts of gas and coal-fired power stations in Britain, capable of generating enough electricity to power around 6 million homes.

Mike Lockett, Uniper UK country chairman, said almost all of these plants have essential contracts under Britain’s capacity market.

“It is feasible it (the suspension) would go into 2020,” Lockett said on the sidelines of an industry event on Tuesday.

“Even though we are not being paid we are still delivering on the capacity we have contracted ... in the expectation it will be reinstated,” he said.

Britain’s government has said it expects to make retrospective payments.

Britain lauched the power capacity market in 2014, offering to pay providers for making supplies available at short notice.

But Tempus Energy launched an appeal against the market, saying it discriminated against technology designed to cut electricity demand during peak times.

The European Commission then launched a review into the market in February but Lockett said this could take 12 months to complete.

Uniper said last week its earnings forecast for 2019 would increase by up to 120 million euros (103 million pounds) if the scheme is reinstated this year.

Reporting By Susanna Twidale. Editing by Jane Merriman

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