Around 20 gigawatts (GW) of stand-by British power capacity could generate as much as 1.5 billion pounds in annual returns for producers by 2020 as they fill gaps caused by retirement of old plants, one of Britain's six big utilities said.
Back-up power generation at warehouses, factories or hospitals, for example, can work more frequently to help keep Britain's lights on when old and polluting plants have to retire.
The value of the services they could provide to the electricity system is rising to perhaps 1.5 billion pounds ($2.4 billion) a year by 2020, said utility RWE npower in an energy market report released in partnership with the London School of Economics on Wednesday.
Between now and 2025, the amount of reserve capacity needed is forecast to more than double to 8 GW from 3.5 GW now and could rise to as high as 16 GW if intermittent wind farms generate at a load factor of 100 percent, the report showed.
Britain's grid operator estimated that the amount plants are paid just for keeping reserve capacity that can be switched on at short notice will more than triple to 945 million pounds a year by 2020.
In addition, RWE npower currently makes 30,000-45,000 pounds per megawatt (MW) when stand-by generation is called upon, the utility said in the report.
The energy supplier also urged that consumers help stem rising energy costs by controlling consumption patterns and even relying on their own stand-by generation.
Britain's big six utilities -- RWE npower, Centrica, SSE, Scottish Power, EDF Energy and E.ON -- have come under fire for pushing up energy bills this autumn and winter, pushing consumer price inflation higher.
Users should focus their energy demand on times when general consumption and prices are low and refrain from using energy at peak times.
Improving energy efficiency in the home is also an important contributing factor.
As electricity prices rise, the return on energy efficiency investment becomes more attractive. Likewise, advances in technology reduce the costs and improve the quality of energy efficiency investment, the report said.
(Reporting by Karolin Schaps, editing by Jane Baird)