Statement
My hon. Friend the Minister for Energy Security and Net Zero (Michael Shanks MP) made the following Statement today:
I am tabling this statement to inform members of two publications relating to the Capacity Market. Both publications are government responses to the recent Consultation and Call for Evidence on proposals to maintain our electricity security and enable flexible capacity to decarbonise. This supports our goals of making Britain a clean energy superpower by 2030 and accelerating progress to net zero.
The Government is committed to delivering clean power by 2030 and accelerating progress towards net zero, whilst ensuring the security of supply. Making Britain a clean energy superpower by 2030 is one of the Prime Minister’s five missions. Being on track for clean power 2030 is the Prime Minister's Plan for Change milestone for this parliament.
To deliver this mission, we will rely even more on renewable power. This will result in a wholesale shift in our long-term power system. The variable nature of renewables makes it critical that we have sufficient flexible capacity that can be ramped up quickly when generation from renewable sources is low, such as on dark, still days. The Clean Power Action Plan published in December 2024 projected that we will need 40-50GW of dispatchable and long-duration flexible capacity in 2030 to support our power system and maintain security of supply.
This will require accelerated deployment of low carbon flexible technologies. The Government is already investing in low carbon technologies to support the transition away from unabated gas. In the meantime, the Clean Power Action Plan is clear that we will continue to rely on around 35GW of existing unabated gas, until it can be safely replaced by low carbon alternatives that can provide the flexibility needed to keep the system balanced at all times.
Since its introduction in 2014, the Capacity Market (CM) has acted to secure sufficient capacity to ensure consistent and reliable electricity generation. In October 2024, we consulted on proposed changes to the CM to help maintain our existing ageing gas capacity. The Government Response to the CM Consultation commits to supporting the economic case for lifetime extension of ageing plants, vital for security of supply. It will do this by lowering the scale of planned works needed to access three-year CM agreements.
Whilst we need to maintain our existing unabated gas capacity, the Clean Power Action Plan is clear that we will see a fundamental shift in the role and frequency of unabated gas generation. Unabated gas will move from generating almost every day, to an important strategic reserve role, used only when essential. By 2030, unabated gas generation will make up no more than 5% of Great Britain’s total generation in a typical weather year.
The Government Response published today reiterates our intention to ensure that unabated gas plants can decarbonise once low carbon flexible technologies are available. We are introducing two further CM reforms:
New Decarbonisation Readiness (DR) legislation comes into effect from February 2026 and will ensure that all substantially refurbishing and new combustion plants are built decarbonisation ready. We will modify the CM to ensure that all plants prequalifying for the CM in 2025 that would be captured under the new DR legislation commit to comply with the DR requirements.
We will introduce a first managed exit pathway to enable unabated gas generators with multi-year CM agreements to exit early without penalty and transfer to bespoke support, facilitating decarbonisation by retrofitting carbon capture.
We are also publishing a Government Response to the CM Call for Evidence, which aimed to inform further option development to support the decarbonisation of unabated gas and the approach to developing longer-term views of future capacity requirements and supply. This Government Response summarises the feedback received.
The CM reforms we are introducing will ensure that the CM can continue to uphold its primary objective of ensuring security of supply, whilst also playing a crucial role in achieving the Clean Power mission.