Tricks of the trade, by Jillian Ambrose

“Subsidised renewables has driven out new-build gas”

The UK is braced for some of the tightest power supply margins seen in a generation. And after years of warnings that the steady shut down of old coal plant, would leave a looming gap mid-decade, few can be too surprised.

But what has become clear this week is that Blackout Britain may dominate headlines for many more years than expected.

The capacity market was the government’s answer to the question of energy supply for the end of the decade. But this week capacity market concerns deepened as plans for the only example of new investment in gas-fired power crumbled.

Carlton Power said that even though it had managed to secure a contract in the highly competitive capacity market auction this year, it may not be enough to overcome obstacles faced by thermal generators in a new energy world order.

As is the done thing for all energy developers, Carlton pointed to a lack of investor confidence. At the same time the rising share of subsidised renewables has driven market prices for electricity too low for new gas-fired power to survive.

Neither of these factors is any more surprising than the risk of dwindling capacity margins in the first place. But perhaps Carlton had enough optimism to assume that the capacity market would do enough to bring forward new investment rather than simply reward what’s already available.

It’s a pity that optimism can’t keep the lights on – although even that is now looking to be in short supply.