A Czech energy company led by billionaire Daniel Kretinsky was the big winner in a UK auction to secure power capacity, procuring a 15-year government subsidy to build a gas-fired plant.
(Bloomberg) — A Czech energy company led by billionaire Daniel Kretinsky was the big winner in a UK auction to secure power capacity, procuring a 15-year government subsidy to build a gas-fired plant.
EP UK Investments Ltd.’s planned units at Eggborough, Yorkshire, were awarded provisional contracts Tuesday along with a grid-scale battery at the site. That will help secure about £1.5 billion ($1.8 billion) for the company, a subsidiary of Kretinsky’s European energy business, which will add about 1.7 gigawatts of capacity to the country’s grid.
More than two-thirds of the 43 gigawatts of awarded capacity went to gas plants — mostly already built — in a sign of the UK’s continued dependence on a fuel that’s soared in cost since Russia cut flows to Europe after invading Ukraine. Britain plans to have a net zero electricity grid by 2035, likely requiring an acceleration of renewables and carbon capture with fossil-fuel generation.
The capacity market auction is a competition to guarantee financing for existing and new-build UK power generation, with the aim of ensuring there’s enough capacity to meet demand even when it’s not windy. It cleared at a record of £63 per kilowatt per year, significantly higher than expected.
“By pushing the capacity auction price up, operators are hedging against future low power prices,” BloombergNEF analyst Andreas Gandolfo said. “This forces the UK government, and consequently rate payers, to take on the risk.”
Higher auction prices, which are spread across consumer bills, mean a larger up-front cost for the country to bear, but they also help to secure ample supply, which may ease a strain on future costs. It’s designed to pay plants to be available so operators don’t rely only on generating during high-priced hours to make money.
Germany is looking to introduce a similar measure.
Battery Pipeline
Batteries were also a big winner in the auction, with the country’s pipeline doubling, according to Aurora Energy Research’s Tom Smout. Much of the capacity awarded went to projects in Scotland led by global developer Amp Energy, which is set to build batteries that can store power for as long as 4 hours.
The auction often is criticized for failing to bring forward much fresh capacity to the grid, putting the country at some risk of depending on aging fossil-fuel generators to back up intermittent renewables. Only 8% of awards went to new-build generation projects, though it was up from last year’s level.
For Tuesday’s auction for 2026-27, BNEF and Aurora estimated prices would clear around £40-£53.
Last year’s auction saw nuclear plants lose out even as the government pledged to expand use of the technology. The price then — £30.59 — set a record that now has more than doubled.
(Updates with contract value, final auction price and battery details)
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