Blackout risk if subsidies for small diesel generators are scrapped

Jessica Morris
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Ministers and Ofgem want to discourage the growth of highly pollutive diesel power generation (Source: Getty)

Britain could be more vulnerable to future blackouts if Ofgem recommends scrapping subsidies for highly polluting small diesel generators.

Big four accountancy firm KPMG said if this became law it would threaten the construction of these, as well as less polluting gas plants, which are already in the pipeline due to the subsidies awarded the government's "capacity market" scheme.

Read more: National Grid warns government over handing blackout responsibilities to energy regulator Ofgem

"If less distributed generation ran at times of highest demand, there would be a greater chance of blackouts," according to the report commissioned by UK Power Reserve, which builds small gas generators.

While ministers and Ofgem want to discourage the growth of very pollutive diesel power generation to meet their green targets, small diesel generators have become increasingly important due to Britain's increasingly strained energy supply.

"This is the power generation that's kept the lights on over the last several winters," Tim Emrich, chief executive of UK Power Reserve, which commissioned the report told City A.M.

The government should keep subsidies awarded in 2014 and 2015 “otherwise it’s a form of retrospective change,” he added.

Read more: Energy demand to outpace National Grid supply in 2016

“Keeping the lights on is non-negotiable. Our top priority is ensuring that our families and businesses have a secure, affordable, clean energy supply which they can rely on now and into the future," a Department of Energy and Climate Change spokesperson said.

“That is why we recently announced reforms to the capacity market to ensure it remains fit for the purpose of maintaining our energy security.”