Review of the T-4 2024/25 GB capacity market auction
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Review of the T-4 2024/25
GB capacity market auction
May 2021
The T-4 Capacity Auction for delivery in 2024/25 (“T-4 2020 auction”) concluded on 10th March 2021.
In this bulletin, we provide our reflections on the auction results.
Headlines
• The auction cleared at a price of £18.00 per kW per • In addition, about 2.8GW of existing CCGT capacity2 may reflect the impact of reduced revenues from
year, above the clearing price of £15.97 per kW in the that had participated in previous CM auctions failed network charging following the implementation of
T-4 auction for delivery year 2023/24 held in 2020 to either prequalify or clear in this auction, and Ofgem’s Targeted Charging Review.
(“T-4 2019”). 1.5GW of EDF’s existing nuclear capacity failed to • Awarded new build battery storage capacity more
• 40.8GW of aggregate de-rated capacity was clear despite being scheduled to retire a few years than doubled to 252MW facilitated by favourable
procured in this auction, a little bit above the 40.1GW after the 2024/25 delivery year for this auction. commercial factors and recent policy decisions.
target (that was itself quite a bit lower compared to • Offsetting these reductions, the 728MW VikingLink • Awarded renewable capacity (onshore wind and
auctions held in previous years). interconnector was awarded a 1-year contract for solar) quadrupled since last year, despite these
• Similar to the T-4 2019 auction, the non-new-build the first time. In addition, as a result of changes to technologies being eligible for more lucrative
capacity clearing in the auction was 1GW short of the de-rating, there was a material increase in awarded Contracts for Difference (CfD). However, this
target capacity, making way for new build to clear capacity for all other interconnectors relative to the capacity only amounted to 40MW.
the auction at a higher clearing price. T-4 2019 auction.
• There was no meaningful change in Demand Side
• One reason for the shortfall of existing capacity was, • Three new gas fired OCGTs being developed by Response (DSR) capacity clearing in this auction,
as expected, 1.3GW of coal capacity that cleared in Drax were awarded 15-year contracts for 854MW despite this being the first year that DSR meeting
the previous auction not being allowed to participate of capacity. New gas reciprocating engine capacity the relevant capital expenditure thresholds could bid
as new emission limits on existing plant participating was quite a bit lower than in previous auctions, at for 15-year contracts.
in the GB Capacity Market (CM) were applied. 460MW (de-rated). Higher prices for this capacity
1 All capacity referred to in this bulletin is on a de-rated basis unless specified otherwise.
2 Comprised of Intergen’s 747MW Rocksavage CCGT that failed to clear after clearing in the T-4 2019 auction and Calon
Energy’s 764 MW Severn, 765MW Sutton Bridge and 495 MW Baglan Bay CCGTs that failed to prequalify in this auction.
1 Review of the T-4 2024/25 GB capacity market auction — May 2021
Existing generating capacity clearing in the
Winners and losers auction was significantly below previous
auctions, with 1.3 GW of coal capacity
barred from participation, and 1.5 GW of
existing nuclear capacity and about 2.8 GW
of existing CCGTs failing to clear.
35,000
One new
A significant decline in the 30,469 854MW across interconnector
30,000 three Drax OCGTs; to Denmark,
existing generation capacity 412 MW of gas the 728MW
participating and clearing reciprocating VikingLink
in this auction helped pave 25,000 engines; 202MW cleared in the
Derated capacity, MW
of batteries; 79MW auction alongside
the way for new build Existing I/C Uniper’s of EfW; 24 MW of three other “new”
capacity was 675MW
capacity clearing the auction 20,000 onshore wind, 5MW interconnectors
874MW higher Connah Quay of solar and 19MW (Eleclink and IFA
at a higher price than that for the same I/Cs CCGT U1-2 of CHP new build 2 to France and
participating in the that had
observed in the T-4 2019 15,000
T-4 2019 auction
capacity received NSL to Norway)
failed to clear 15-year contracts; that have all
auction (£15.97 per kW) and due to a change in the T-4 Volume of DSR cleared
about 135 MW of cleared in the T-4
in the de-rating
significantly above the T-3 10,000 2019 auction, new-build opted for 2019 auction. in the auction was
methodology cleared this consistent with the T-4
auction held in early 2020 and 1-year contracts
time around. 2018 and 2019 auctions
the T-4 auction held in 2018 5,000 3,355 3,519
that both cleared at single 1,736
675 973
93
digit levels (£6.44 per kW and -
£8.40 per kW, respectively). Existing Existing Refurbishing New Build New Build Proven Unproven
Generating Interconnector Generating Generating Interconnector DSR DSR
CMU CMU CMU CMU CMU CMU CMU
We comment below on how some of these technologies fared in the auction:
• Existing coal plant: Last year the government decided that existing capacity not meeting carbon emission limits proposed in the EU’s Clean Energy for All
Europeans package (effectively any coal plant) would not be allowed to receive capacity payments starting from 1 October 20243. This meant that this was the first
T-4 auction where existing coal plant that might have still been operational for the 2024/25 delivery year (i.e., 1.3GW of Uniper’s Ratcliffe Units 1, 2 and 4, which
was the only coal plant that cleared in the T-4 2019 auction) was not eligible to participate and did not pre-qualify. It is worth noting in a post-Brexit world that this
outcome is likely to have occurred regardless of the European legislation given the UK policy to remove coal from the system by 2025.
• Existing CCGTs: Intergen’s 747MW Rocksavage CCGT joined SSE’s 716MW Keadby and 662MW Medway in not clearing the auction, indicating decisions to retire
ahead of the 2024/25 delivery year. The latter two plants did not clear in the T-4 2019 auction either. In addition, Calon Energy’s 764MW Severn, 765MW Sutton
Bridge and 495MW Baglan Bay CCGTs that had participated in previous CM auctions, failed to prequalify for this auction. Severn and Sutton Bridge were put
into “a dormant state of managed preservation” in August 2020 to allow creditors more time to recover costs after Calon Energy went into administration in June
2020.4 The two units were subsequently returned to the company directors in late March 2021.5
3 BEIS. Capacity market: Government response to consultations on future improvements, emission limits and coronavirus measures. May 2020. Available at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/
attachment_data/file/886147/Future_improvements__emission_limits_and_coronavirus_easements_-_government_response_to_consultations.pdf
4 https://www.bbc.co.uk/news/uk-wales-53895806
5 Bloomberg. Administrators return two UK Gas Stations to Calon Energy. March 30, 2021. Available at: https://news.bloomberglaw.com/bankruptcy-law/administrators-return-two-u-k-gas-stations-to-calon-energy
2 Review of the T-4 2024/25 GB capacity market auction — May 2021
Winners and losers
Continued
• Nuclear plant: EDF’s 449MW Dungeness B Unit 22 was unable to • Interconnectors: A new interconnector, Viking Link connecting to Denmark,
pre-qualify for the auction as it did not meet the requirement of having received a contract for 728MW of de-rated capacity. In addition, across all
generated within the previous 2-year window. This may explain why the other interconnectors there was an 874MW increase in awarded capacity
440MW Dungeness B Unit 21 that did prequalify failed to clear. Somewhat relative to the T-4 2019 auction resulting from a change in de-rating factors.
more surprisingly, 1GW of other existing nuclear capacity (comprising of We discuss this in more detail below.
half the units at EDF’s Heysham 2 and Torness plants) failed to clear.
We discuss this in more detail below.
Awarded Nuclear Capacity Awarded Interconnector Capacity
1200 1600
23/24 T-4 23/24 T-4 24/25
24/25 1400
1000
1200
De-rated capacity (MW)
800
De-Rated Capacity
1000
600 800
600
400
400
200
200
0 0
Heysham 2 Torness Dungeness B Sizewell B BritNED
(Netherlands)
EWIC
(Ireland)
Eleclink
(France)
Moyle
(Northern
Ireland)
IFA
(France)
NSL
(Norway)
IFA2
(France)
NEMO
(Belgium)
VikingLink
(Denmark)
(2030) (2030) (2028) (2035)
Nuclear plants and their estimated de-comissioning dates
3 Review of the T-4 2024/25 GB capacity market auction — May 2021
Winners and losers
Continued
• OCGTs and reciprocating engines: Of the 1.7GW of new build capacity • Battery storage: Awarded battery storage capacity more than doubled from
clearing in the auction, more than three quarters was comprised of flexible, 118MW in the T-4 2019 auction to 252MW, likely facilitated by recent policy
gas-fired capacity. This included three OCGTs being developed by Drax decisions and other factors improving the commercial environment for battery
that received 15-year agreements for 854MW capacity in total, and 460MW storage. There has been an increase in the amount of battery storage with longer
across 44 new gas reciprocating engines. durations clearing over the last few auctions, partly due to longer duration
Compared to previous auctions that cleared at a higher price, considerably storage having a higher de-rating factor. We discuss this in more detail below.
fewer new build reciprocating engines cleared, potentially reflecting the
impact of reduced revenues from network charging arrangements following Awarded Battery Storage Capacity
the implementation of Ofgem’s Targeted Charging Review. Compared to the 200
De-rated capcity
T-4 auction for delivery in 2019/20 (which also cleared at £18 per kW), in this T-3 22/23 T-4 23/24 T-4 24/25
150
auction only half as much new build reciprocating engine capacity cleared.
(MW)
100
50
Recips Awarded Capacity vs Clearing Price
0
2500 25 Storage Storage Storage Storage
(Duration 0.5h) (Duration 1h) (Duration 1.5h) (Duration 2h)
2000 20
• Renewables: Awarded renewable capacity quadrupled since last year from 10MW
De-rated capcity (MW)
Clearing price £/kW
to 40MW. 28MW of onshore wind plant was awarded agreements, of which 24MW
1500 15 was new build plant receiving 15-year contracts. Solar plant featured for the first
time in a T-4 auction, winning 12MW of capacity in total, of which the 5MW Bilton
Farm received a 15-year contract as a new build plant.
1000 10
Renewable Awarded Capacity
500 5
Onshore Wind
0 0
T-4 T-4 T-4 T-4 T-3 T-4 T-4
18/19 19/20 20/21 21/22 22/23 23/24 24/25 23/24
Solar Photovoltaic 24/25
Existing Generating CMU New Build Generating CMU
Clearing Price £/kW 0 5 10 15 20 25 30
Awarded de-rated capcity (MW)
4 Review of the T-4 2024/25 GB capacity market auction — May 2021
Winners and losers
Continued
As the table below shows, these renewable generators have opted to enter • Capacity failing to clear: As in previous auctions, CCGTs comprised the
into agreements that imply a very low level of £/kW payments based on non- largest proportion of new build capacity failing to clear. Participating CCGT
de-rated capacity. Compared to a CfD contract, the equivalent annual £/MWh capacity was quite a bit lower, reflecting developers giving up on projects
support for these generators is close to zero (and the plant bear merchant that have been in the pipeline for some time now and have failed to clear in
energy price risk), which may mean these generators are expecting future CfD previous CM auctions where prices have failed to reach the £25/kW-year-
auctions for onshore wind and solar to clear at a low premium in the future. plus range that a CCGT is likely to require.
Awarded Equivalent Agreed £/KW Agreed £/KW Equivalent Losing Capacity by CMU and Technology type
De-Rated Installed of De-Rated of Installed Annual £/MWh
Capacity Capacity Capacity Capacity of Installed
(MW) (MW) (MW) (MW) Capacity (MW) 7000
Solar PV 12.5 535 18 0.4 0.4
6000
Onshore 27.9 358 18 1.4 0.6
Wind
5000
De-rated Capacity (MW)
Note: Equivalent Annual £/MWh of Installed Capacity is calculated by
assuming load factors of 11% for Solar PV and 27% for Onshore Wind 4000
3000
• Demand Side Response: There was no meaningful change in DSR capacity
clearing in this auction despite this being the first year in which DSR was 2000
allowed to bid for 15-year contracts. The inability of DSR to obtain longer-
term capacity contracts was a key point of contention in Tempus Energy’s 1000
appeal against the European Commission’s approval of the GB CM that
0
resulted in the suspension of the market over the course of November 2018
Existing New Build Other
to October 2019.6 As part of the reinstatement of the CM, BEIS committed Generating CMU Generating CMU
to allow all types of capacity (except interconnectors) meeting the capex
Interconnector Reciprocating engines Combined Heat and Power (CHP)
threshold to obtain up to fifteen-year contracts.7 Only one aggregator,
DSR Combined Cycle Gas Turbine (CCGT) Open Cycle Gas Turbine (OCGT)
Zenobe Energy, sought a 15 year contract for a group of coach/bus Onshore Wind Energy from Waste Coal
chargers, but did not clear in the auction. Hydro Nuclear Storage - Battery
Storage - Pumped Solar Photovoltaic
6 Frontier and LCP reported on the suspension of the GB capacity market that can be found here: https://www.frontier-economics.com/media/2939/gb-capacity-suspension_v05.pdf
7 BEIS. Capacity market: Government response to consultation on future improvements, emission limits and coronavirus easements. May 2020.
Available at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/886147/Future_improvements__emission_limits_and_coronavirus_easements_-_government_response_to_consultations.pdf
5 Review of the T-4 2024/25 GB capacity market auction — May 2021Drivers of the clearing price
We previously commented8 on the reduction in National Grid’s target capacity Looking at the supply in this auction, the prequalifying capacity was also low
for T-4 auctions in recent years, due in large part to growth in renewable compared to the T-4 2019 auction.
generation. Relative to the T-4 2019 auction, target capacity declined again
this year by 1.4GW to 41.7GW. This was a result of a drop in peak demand Total Pre-Qualified Capacity
forecast of 1.4GW and a reduction due to previously contracted capacity
50000
(1.8GW), offset by increases due to the amount held back for the T-1 auction T-4 23/24 T-4 24/25
De-rated capcity (MW)
and the known non-deliveries. 40000
30000
Drivers impacting the target capacity
20000
45
10000
44 0
43.1
Existing
Generating
CMU
Existing
Interconnector
CMU
Refurbishing
Generating
CMU
New Build
Generating
CMU
New Build
Interconnector
CMU
Proven DSR
CMU
Unproven DSR
CMU
43
42 0.1 0.35 41.7
0.15
-1.4 0.4
41 0.8
Requirement, GW
40.1
40 The net effect was that non-new build capacity clearing in the auction was once again
-1.8 -1.6
not sufficient to meet the auction’s target capacity, as was the case in 2016 and 2019.
39
This resulted in a higher price – in contrast to years in which existing capacity was
38 sufficient (2017 and 2018), when the clearing price was significantly lower.
37
Comparison of capacity requirement and capacity clearing in the previous T-4,
36
the T-3 and recent T-4 auctions
35
54 51.7
2023/24 final
reqt (T-4)
Peak demand
Reserve
requirement
Previously
contracted
Held back
for T-1
Other
changes
Autogeneration*
Known
non-delivery*
2024/25
provisional reqt
(T-4)
Additional held
back for T-1**
2023/24 final
reqt (T-4)
Non new build capacity cleared
49.2
New build capacity cleared
De-rated capcity (GW) 50 3.4 0.8
Target capacity
46 44.0
0.3 43.1
49.0 49.6
1.8
* January 2021 adjustment 42 40.1
44.8
41.9 1.7
** February 2021 Secretary of State decision 38 39.1
T-4 2016 T-4 2017 T-3 2018 T-4 2019 T-4 2020
(2020/21) (2021/22) (2022/23) (2023/24) (2024/25)
8 Frontier and LCP. Review of the T-4 2019 capacity market auction. May 2020. Available at: £22.50/kW £8.40/kW £6.44/kW £15.97/kW £18.00/kW
https://www.frontier-economics.com/media/3916/cm-2020-briefing_v23-002.pdf
6 Review of the T-4 2024/25 GB capacity market auction — May 2021Deep dive on key technologies
In this section we look more closely at a how a few key technologies fared in this auction.
Nuclear Interconnectors
As discussed above, only half of the prequalified capacity at EDF’s Heysham 2 Cleared interconnector capacity was 1.6GW higher than in the T-4 2019. This
and Torness plant cleared in the auction. More specifically, Heysham 2 Unit 8 was partly due to a new interconnector with Denmark, VikingLink, receiving a
and Torness Unit 2 cleared the auction, but Heysham 2 Unit 7 and Torness Unit 1 contract for 728MW of de-rated capacity.
failed to clear. Since there are often categories of fixed cost shared across pairs
of units, this may have been an unexpected outcome likely driven by a couple of Awarded Interconnector Capacity
factors (which are not mutually exclusive): 1600
• to reduce risk of non-delivery: both Heysham 2 and Torness plant T-4 23/24 T-4 24/25
commenced operation in the late 1980s and are well into their useful lives. 1400
The operating lives for both Advanced Gas-cooled Reactors were extended
1200
by EDF from 2023 to 2030.9 Accepting a contract for only one unit in each
De-Rated Capacity
pair would provide EDF with a contingency against non-delivery if one 1000
or more units needed to close for maintenance over parts of the 2024/25
delivery year. 800
• to allow them to bid in T-1 for 2024/25: EDF may be looking to enter the
units that failed to clear in this auction into future T-1 auction for the same 600
delivery year. This decision could have in part been motivated by the clearing
400
price in this year’s T-1 auction (for delivery in 2021/22) clearing at £45/kW,
the highest price ever observed in a GB CM auction.10
200
Of course, in withdrawing the capacity, EDF (and other generators) will have
benefited from higher capacity prices than would otherwise have been the case. 0
At a price of £18/kW on 3.3GW of capacity, EDF’s fleet capacity revenues will
BritNED
(Netherlands)
EWIC
(Ireland)
Eleclink
(France)
Moyle
(Northern
Ireland)
IFA
(France)
NSL
(Norway)
IFA2
(France)
NEMO
(Belgium)
VikingLink
(Denmark)
amount to £59.1 million. On their full pre-qualified capacity of 4.8GW, the price
would have had to have been below £13/kW for revenues to be lower.
9 EDF Energy. Available at: https://www.edfenergy.com/energy/nuclear-lifetime-management
10 The high price was driven by an increase in the target capacity from 0.4GW to 2.4GW in January. Despite a decrease in the expected ACS Peak Demand (-1,700MW), large adjustments to the target for known non-delivery (+1,850MW) and
capacity at risk of not being operational or being unavailable (+3,900MW and +1,700MW) led to an overall increase. With the higher target in place, the auction cleared at £45/kW after the West Burton A coal units exited in the £45/kW to £50/
kW round. In addition, the auction’s “descending clock” round structure played a potentially significant role in setting the high clearing price. It is possible that the next bid was significantly lower than £45/kW (if bids had been sealed), but the £5/
kW round structure forced a clearing price of £45/kW once sufficient capacity had exited in the round. If the next bid down was, for example, £15/kW, then the round structure meant an additional £67m in cost to consumers.
7 Review of the T-4 2024/25 GB capacity market auction — May 2021Deep dive on key technologies
Continued
The remaining 874MW increase in cleared interconnector capacity was due The de-rating factors are determined through forward-looking modelling of
to higher de-rating factors. This comes after National Grid had previously expected interconnector flows taking into consideration new interconnectors
significantly lower de-rating factors from the 2022/23 T-3 auction to the coming online in the future and surplus capacity in the connected market during
2023/24 T-4 auction. For example, BritNed was awarded 69% more de-rated times of stress in GB. The changes in de-rating factors are therefore a result of
capacity for the 2024/25 delivery year relative to 2023/24, its de-rating factor changes in the assumptions and scenarios used in this forward-looking modelling.
increasing from 36% to 61%. As more interconnectors are developed, these (sometimes subjective) inputs
will matter more and more. The changes in de-rating factors compared to the
Installed Interconnector Capacity and De-Rating % last auction are equivalent to the addition of a material new power station to the
system. As such, if the de-rating factors continue to be volatile, they will represent
a significant source of uncertainty for bidders.
2500 100%
National Grid ESO has recently indicated they will update their methodology for
calculating interconnector de-rating factors in ECR 2021 to align more closely with
2000 80% ENTSO-E’s proposals for allowing foreign participation in the CM. In particular,
Installed Capacity (MW)
the forward-looking modelling will now scale the capacity in each foreign market
1500 60%
to meet the market’s assumed security standard, rather than running sensitivities
using a single scaling factor across all markets. LCP and Frontier looked at
ENTSO-E’s proposals in detail for the Independent Generator’s Group (IGG) last
1000 40% year, and found that this relatively technical change – if it is employed as the base
case recommendation – could result in materially lower Interconnector de-rating
factors. This would clearly be a positive factor for future prices.
500 20%
The de-rating methodology is meant to be an indication of the degree to
which the interconnectors can be relied upon to provide security of supply.
0 0% Interconnectors have recently been affected by the “de-coupling” of GB
and European power markets following the UK’s exit from the EU, which has
BritNED
(Netherlands)
EWIC
(Ireland)
Eleclink
(France)
Moyle
(Northern
Ireland)
IFA
(France)
NSL
(Norway)
IFA2
(France)
NEMO
(Belgium)
VikingLink
(Denmark)
immediate implications for the day-ahead market11, but also reduces the prospect
of continuous intraday market coupling being implemented any time soon.
This intraday coupling is arguably more important in terms of ensuring the
Installed Capacity (MW) T-3 22/23 T-4 23/24 T-4 24/25
interconnectors can react quickly to an emerging stress situation. It is not clear if
or how this should be taken into account in de-rating factors.
11 Frontier and LCP recently explored this issue and estimated that inefficient Interconnector flows are resulting in lost trade of £45m per annum. Available at: https://www.frontier-economics.com/uk/en/news-and-articles/articles/article-i8192-
brexit-and-interconnectors-a-45m-problem/
8 Review of the T-4 2024/25 GB capacity market auction — May 2021Deep dive on key technologies
Continued
Battery storage A number of favourable policy and regulatory changes recently implemented
Cleared battery storage capacity has more than doubled since last year, with for electricity storage could have contributed to this growth in cleared storage
an increasing amount of longer duration storage clearing, partly due to longer capacity. These include its classification as electricity generation (hence
duration storage having a higher de-rating factor. In this auction, 69% of the removal of final consumption levies); earlier removal of double charging of
cleared de-rated capacity was in longer 2-hour duration storage, compared to electricity storage (both as generation and demand); and changes to planning
17% and 0% in 2023/24 and 2022/23 auctions respectively. law allowing energy storage projects over 50MW to bypass the Nationally
Significant Infrastructure Project (NSIP) process.
Storage De-Rating Factors It is understandable that there is so much interest around batteries. The
value from arbitrage looks to be positive going forwards, with the gas prices
60.00% recovering and more renewables being deployed, providing more opportunities
for energy storage in the intraday and balancing markets. Moreover, Dynamic
T-3 22/23 T-4 23/24 T-4 24/25
Containment (DC) continues to provide contracts at £17/MW/h, although
50.00%
the value of these contracts can be expected to fall as the market becomes
saturated.12
40.00%
De-Rating Factor %
30.00%
20.00%
10.00%
0.00%
Storage Storage Storage Storage
(Duration 0.5h) (Duration 1h) (Duration 1.5h) (Duration 2h)
12 Further information on the opportunities available for battery storage assets in the GB power
market can be found in LCP’s report ‘Is battery storage a good investment opportunity?’
9 Review of the T-4 2024/25 GB capacity market auction — May 2021Looking ahead
As we noted above, technical changes around interconnector de-rating may
be an important factor in forthcoming auctions. Beyond this, ACER recently
published their decision on common rules for cross-border participation
of capacity in the capacity mechanisms of other EU Member States, which
serves to implement the requirements of Regulation 2019/943. However, the
EU-UK Free Trade Agreement clearly placed no requirement on either party
to ‘permit capacity situated in the territory of the other party to participate
in any capacity mechanism in its electricity markets’.13 As a result, the UK has
freedom to use its own preferred cross-border model going forward, making
the continuation of direct interconnector participation on UK borders perhaps
the most likely model for the foreseeable future. While this model remains in
place it seems unlikely that neighbouring EU Member States would open their
markets to direct participation from GB generation capacity.
One other aspect of the capacity mechanism that has not yet received
much attention pertains to secondary trading of capacity agreements,
allowing units to transfer their secured CM agreements to other parties. To
date this has occurred in a small number of instances usually when the unit
holding the agreement has decided to retire earlier than planned.14 While few
secondary trades have occurred to date, the need for secondary trading may
grow over the next few years as more capacity reaches the end of its life,
bringing greater risk of capacity closing prematurely and at short notice, to
be replaced through secondary trading.
Ofgem highlighted secondary trading as an area they would like to improve
13 “Each Party shall ensure that any capacity mechanism in electricity markets is clearly defined, transparent,
in their Five-year Review of the Rules and they are working on proposals proportionate and non-discriminatory. Neither Party is required to permit capacity situated in the territory of the
to reduce rule complexity, remove barriers to entry and ensure appropriate other Party to participate in any capacity mechanism in its electricity markets.” P. 175, paragraph 3 here:
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:22020A1231(01)&from=EN
transfer of risk. In addition to regulatory changes, one other interesting
14 Following the closure of RWE’s Aberthaw coal fired power station in March 2020 the station’s existing Capacity
possibility being explored at present (through a BEIS funded project) is Market agreements for the years 2019/2020 and 2020/2021 were transferred to other market participants and a
small proportion to other units within RWE’s fleet.
the automation of the process of transferring capacity and allowing local
15 Much of this process is done manually including contract negotiation and bidding and there is no transparent way
Distribution System Operators (DSO) flexibility which has not secured a CM to find opportunities for trade. Piclo Blog. Five things you should know about secondary markets.
Available at: https://blog.piclo.energy/post/641931263886966784/five-things-you-should-know-about-secondary
contract to be offered into the secondary capacity market.15
10 Review of the T-4 2024/25 GB capacity market auction — May 2021Contact us
If you would like more information please contact your usual LCP adviser or one of our specialists below.
Tom Porter (LCP) - Partner Dan Roberts (Frontier) - Director
tom.porter@lcp.uk.com dan.roberts@frontier-economics.com
+44 (0)20 7432 3063 +44 (0)20 7031 7114
Chris Matson (LCP) - Partner Abbas Hussain (Frontier) - Manager
chris.matson@lcp.uk.com abbas.hussain@frontier-economics.com
+44 (0)20 7432 0674 +44 20 7031 7162
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