UK utilities for the first time bid for government payments to keep their power plants open and avoid blackouts on Tuesday.
Companies from EON SE to Electricite de France SA will compete to secure contracts to deliver power from the winter of 2018, with 25 percent more capacity on offer than is being sought. Payments may be as high as $5.7 billion under the terms of the auction, according to Bloomberg.
The tender is intended to encourage power stations to stay connected to the network and spur building of new plants as pollution rules force some coal-fed facilities to shut and previously unprofitable gas generators are mothballed.
The government seeks 48.6 gigawatts in the auction, or about 90 percent of peak demand. It is also aiming to incentivize 20 gigawatts of new power generation by 2030 through the contracts offered by the annual capacity mechanism auction.
Almost 65 gigawatts of power capacity has qualified for the winter 2018 sale, which can last as long as four days, according to National Grid Plc, the UK network operator running the auction.
