Electricity Peaking Stations
Electricity peaking stations, also called peak-lopping plants, are power plants designed to help balance the fluctuating power requirements of the electricity grid.
Capacity Market and STOR
In the UK peaking stations functioned primarily in the Short Term Operating Reserve (STOR) market. This has since been expanded to include the Capacity Market.
The Capacity Market is a key component of the reform of the UK electricity market. The UK’s electricity grid has historically relied on large centralised power plants supplying domestic and business consumers alike. The old coal power plants are in the process of ramping down capacity and closing as they no longer meet the required environmental and performance standards. Nuclear power plants are reaching the end of their design lives and new nuclear plants are slow to be realised. In parallel there is the requirement to deliver a greater amount of renewable energy. Technologies such as wind power generation and solar power generation are notoriously intermittent, only generating when the wind blows or sun shines. These different factors mean that demand and supply are more challenging to match.
The Capacity Market aims to balance the mismatch between demand and supply and to bring forwards investment in new generation projects and innovative technologies, in parallel to maximising the utilisation of the existing generation capacity. Generators that opt to work in the Capacity Market receive a steady revenue stream in the form of capacity payments that enables them to invest in new power generation assets. There is also a capacity obligation that requires generators to be able to deliver electricity when needed or face a penalty charge.
There are a number of benefits to the deployment of efficient gas engines versus less efficient units or diesel-fuelled generators. These are explored in this article.