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Business electricity: UK coal plants to close by 2025

The UK energy industry’s rapid evolution continues with an end to coal-fired power by 2025. What does this mean for your business electricity?

The UK has become the first large world economy to set a deadline to close its coal plants. In a bid to cut carbon emissions and other coal-related pollution, renewable energy sources will be complemented by nuclear and gas-fired power plants.

The move is not just selfless environmental consciousness: many of the UK’s 12 coal power plants ageing and would be forced to close anyway by tightening EU standards. But some doubt that such a change is feasible: about a third of the UK’s electricity came from coal-fired plants last year and other sources of energy have proven hard to put in place. Wrangling over a new nuclear plant with Chinese investment continues and cuts to renewable subsidies have led to warnings about the future sustainability of the renewables sector.

Perhaps more damning is the simple observation that replacing coal with gas does not necessarily reduce carbon emissions. And not all coal plants may be closed – those with carbon capture and storage (CCS) and other technology may remain open. One such is the Ratcliffe-on-Soar plant in Nottinghamshire, which, although relatively old (commissioned in 1968), is compliant with the Large Combustion Plant Directive (LCPD) and is the first power station in the UK to be fitted with Selective Catalytic Reduction (SCR) technology, which reduces nitrogen oxide emissions.

In fact, forcing modern coal plants with anti-polluting technology to close could actually be worse for the environment. Drax, for example, already announced last month that it would halt investment in the UK’s only coal CCS. The details of what will be permissable remain sketchy: the Department of Energy and Climate Change has said the policy will be better defined following a consultation. While the Government has committed to three more auctions to offer support for renewable power generation, again, there is no concrete information on how much funding will be available.

Juliet Davenport OBE, chief executive of renewable energy company Good Energy, is one of the critics: “I’d challenge the government to offer a truly level playing field for all technologies,” she says. “Before the Government changed the policy goalposts, onshore wind and solar were on track to be the cheapest sources of UK power with the potential to be subsidy-free by 2020. The government’s apparent preferred options of nuclear and gas, and an old fashioned grid are not cheap and will not be subsidy free for decades.

Cheaper business electricity?

Such long term perspectives aside, coal remains the cheapest business electricity generator, at least for now. However, simply equating the end of UK coal with more expensive electricity for small business is too simplistic. Renewable electricity is actually already cheaper than many realise, especially when environmental impacts are taken into account. Ever tighter regulation will steadily raise the price of coal generated business electricity as better Europe-wide power integration lowers the price of renewable generated commercial electricity.

Yet the low price of coal generation means it is still the cheapest business electricity, despite recent falls in commercial gas prices. Putting in place a contract on today’s relatively low prices could be sensible, especially as a looming business electricity supplier crunch could see electricity tariffs rise significantly.

Finding the cheapest business electricity supplier for your SME doesn’t have to be onerous: Just 20 minutes is enough for us to give you a free business electricity comparison and switch you to a new supplier so give us a call on 0330 0100 251 (or request a call back using our form) now.

Our dedicated page has lots more information about business electricity.

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