Early start to UK power supply scheme to cost 2-3 bln stg

* Scheme to help keep lights on from winter 2017

* Costs 28-38 pounds per household

* Govt says bills would be higher without the scheme (Updates throughout, recasts with costs)

By Oleg Vukmanovic and Susanna Twidale

May 6 (Reuters) - Bringing forward by a year the launch of a scheme to encourage power companies to safeguard the supply of electricity at peak times could cost Britain as much as 3 billion pounds ($4.3 billion), according to government documents.

The country faces the threat of electricity supply shortages over the next few winters as coal plants close due to weak economic conditions and investors see little incentive to build new power plants.

Under the government's new capacity market scheme, the owners of power plants are to be paid to provide back-up electricity at short notice.

The capacity auctions were due to secure power from winter 2018/19 but coal plants closures have forced the government to start a year early and seek capacity from winter 2017.

The scheme will kick in when supply is too low to meet demand, for instance when renewable energy sources fail to produce enough power or when thermal power plants have failures.

Renewable power generators, such as wind farms and solar plants, provided 25 percent of the country's electricity in 2015.

An impact assessment published by the Department of Energy and Climate Change, said the early auction would likely cost 2-3 billion pounds -- equating to a cost of 28-38 pounds per household.

However, the assessment said the overall impact on bills for Britons would be lower since the auction would lead to lower wholesale electricity prices.

The auction should also prevent potential price spikes which it estimates could have cost households as much as 46 pounds.

The first auction, to secure back-up supply for winter 2017/18, would take place between Sept. 1, 2016 and July 31, 2017 a National Grid (LSE: NG.L - news) spokesman said.

The first capacity auction, held in Dec. 2014 for power for 2018/19 cleared at 19.40 pounds per kilowatt, costing 1 billion pounds.

The scheme has been criticised by some environmental groups and businesses for failing to encourage new gas plants and subsidising polluting diesel generators. ($1 = 0.6919 pounds) (Reporting by Oleg Vukmanovic in Milan and Susanna Twidale in London; Editing by Keith Weir)