Consumers face £750m subsidy scheme bill for generators to keep lights on

But price demanded by energy companies in government’s ongoing ‘capacity market’ auction is substantially lower than feared

Energy consumers look set to pay at least £750m a year extra after a government-run auction finished with some power companies winning subsidies of between £15 and £20 per kilowatt of generating plant. This was significantly lower than the £75-per-kW price level that opened the bidding sessions on Tuesday but could still leave ministers being asked to justify why such “capacity payments” are being made at all.

The Department of Energy and Climate Change (Decc) has declined to comment ahead of a formal announcement today, but has previously argued these subsidies would ensure security of supply by providing a payment for reliable sources of capacity to ensure they delivered energy when needed.

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