Britains Power Plants Under Scrutiny as Gas Stations Charge Record High Prices and Reform Looms

Travel just 18 miles north of London to encounter the imposing Rye House power station in Hertfordshire, a facility with a long and lucrative history. Since beginning operations in 1993, Rye House has stood as Britain’s longest-serving gas-fired power plant on the current market—and now, one of its most controversial. The plant’s owner, a subsidiary of Vitol, has repeatedly drawn attention for demanding record-breaking fees to deliver power, sometimes charging as much as £6,000 per megawatt-hour. For context, UK electricity market rates usually range between £60 and £100 per megawatt-hour.

This dramatic escalation in price was particularly evident during the 2022 winter, a period sharpened by soaring global gas prices following the Russian invasion of Ukraine. During especially cold spells, Rye House and another gas plant were each paid over £6 million for only a few hours of operation. The sums ignited furore among climate campaigners and consumer rights advocates, who are now urging the government to accelerate Britain’s transition away from gas power, targeting a drastic cut to just 5 percent of the electricity mix by 2030.

The underlying challenge lies within the structure of the British electricity grid. When supply is tight, the National Energy System Operator invites energy companies to bid for the price at which they can activate their plants, ensuring the system avoids blackouts. Many such plants, Rye House among them, are essential not merely for their capacity but for their role in stabilising grid frequency—a requirement wind and solar cannot yet fulfil. As coal-fired power faded from the grid, the importance of these gas stations has only increased, even as the country races to decarbonise the sector.

VPI, the proprietor of Rye House, claims the high prices reflect the unique economics of operating a seldom-used asset. Kept in preservation mode for much of the year, Rye House incurs substantial costs when idle, then must extract sufficient earnings during its 5-10 percent operational window to remain viable. Senior industry figures argue that failing to support these veteran plants would ultimately force up costs for consumers due to the likely expense of building replacements.

To stabilise the industry, the government established a capacity market mechanism in 2012. Power companies compete in auctions for contracts intended to cover the costs of keeping plants on standby, with shorter and longer-term contracts aiming to ensure readiness. While some generators, such as RWE, run their plants more routinely and avoid the ‘scarcity pricing’ seen at Rye House, the dynamic is changing. Industry leaders liken their role to that of a fire brigade—rarely deployed, but indispensable when called upon, and consequently requiring payment for availability rather than usage.

Dissatisfaction with occasional sky-high pricing and its impact on consumer bills has spurred new calls for reform. Proposals commissioned by organisations such as Greenpeace urge the creation of a strategic gas reserve—removing gas plants from the open electricity market and paying agreed rates for emergency use only, rather than allowing extreme spikes to ripple through wholesale prices. Critics warn these changes might stifle broader energy flexibility, such as battery deployment or responsive demand, yet agree that debate on systemic reform is overdue. Balancing affordable energy, ever-decreasing fossil fuel reliance, and a stable power supply remains a high-wire act as the country’s energy landscape evolves.