Consumers may foot the bill for gas power plants under green push

Government exploring new subsidies to develop carbon capture systems

Energy bill payers could be forced to fund low-carbon gas power plants that generate little electricity in new plans to help the UK meet its net zero targets. 

Customers would be charged under Government proposals meant to help ensure that private developers build power stations with carbon capture units attached.

As part of an upgraded, cleaner grid, some plants would be started up when there is not enough wind or sunshine to power renewable energy sources – meaning they could spend days sitting idle.

The proposed “availability payments” would most likely be levied on bills and would come on top of other variable fees to encourage the use of power plants with carbon capture ahead of those without. 

These subsidies are among several mechanisms being explored by ministers as they try to reduce the UK’s carbon emissions to meet the country’s legally binding target of getting to net zero by 2050. 

Large thermal power plants, such as gas-fired ones, will still be needed to stabilise the grid even as more wind and solar power comes online.

But they might be used less than before and they will also need to mitigate their emissions using carbon capture technology, which has yet to be developed at scale in the UK – adding up to a more difficult investment case.

Carbon capture and storage systems capture carbon dioxide emitted by power plants or industrial sites and stash it underground, for example in depleted gas fields in the North Sea. The technology is still being developed and remains relatively rare around the world.

In a consultation paper, officials at the Department for Business, Energy and Industrial Strategy (Beis) said: “A combination of these payments could enable a plant to operate flexibly, providing value to a low-carbon electricity system with growing renewable capacity, and still provide sufficient certainty to investors.”

It is likely the payments would be made through the government-owned Low Carbon Contracts Company, which manages the Contract for Difference subsidy scheme that is ultimately funded by energy suppliers and bill-payers. 

Any new subsidies are likely to spark further controversy over how the costs of the transition towards a lower carbon energy system should be shared between industry, consumers and taxpayers.

Taxpayer support has given a major boost to wind power in the UK in the past few years, and rapidly dropping costs mean it is now competitive with fossil fuel generators on its own merit.

However, subsidies for the Hinkley Point C nuclear power station being built in Somerset have drawn huge criticism. 

The consultation on carbon capture comes as the government also considers a new financing model for nuclear power plants that would force bill payers to cover development costs upfront.

Backers argue this would bring financing costs down by spreading risk, while critics believe it shifts too much risk on to consumers. 

This week, nuclear industry leaders published a report claiming that the so-called "regulated asset base" funding mechanism is among several measures that can help cut the costs of new nuclear power stations in the UK by 30pc. 

Nadhim Zahawi, Minister for Business and Energy, said he was “delighted to see the nuclear industry setting out a clear and robust framework to reduce costs".  

Addressing carbon capture in last month’s papers, Beis officials said they would seek to avoid saddling consumers with high costs.

They added: “CCUS [carbon capture, utilisation and storage] will be a crucial part of our green recovery.

"It is essential that we act now to put ourselves on track to meet our net zero emissions target by 2050, as well as driving growth across the UK and providing high-skill, well-paying jobs for all sections of our society.”