Are you Capacity Market Auction ready?

14 Jan 2021

It’s that time of year again where attentions turn to the capacity market, with a flurry of activities over the coming months leading up to the T-1 & T-4 auctions held on 2nd and 9th March 2021, respectively.

The Capacity Market was introduced by The Depart​ment of Business, Energy and Industrial Strategy as part of the Electricity Market Reform programme to ensure the future security of our electricity supply.

Prequalification closed in September 2020, with a total of 4.4 GW (de-rated capacity) of projects prequalifying, or conditionally pre-qualifying, for the 2021-22 (T-1) auction and 53 GW for the 2024-25 (T-4) auction.

The charts below show the range of prequalified technologies for each auction. Coal operators will be looking to ‘sweat their assets’ in the T-1 auction ahead of the UK coal phase out by 2025. Whilst gas continues to account for a substantial percentage of the mix. Offshore wind has not made the list, as had been anticipated, with onshore wind and solar only accounting for a very small percentage of the mix. Overall, the prequalification list reflects the diversity in the UK’s energy mix with a move away from fossil fuels and increase in low carbon technologies.

2021-22 (T-1) 4.4GW prequalified (values shown in MW)

2024-25 (T-4) 53GW prequalified (values shown in MW)

The EMR Delivery Body recently held their Auction Readiness webinar for Capacity Market Unit (CMU) providers and held their Auction System Training Day on 13th January.

Other keys dates to watch out for in 2021 are:

 T-1T-4
Deadline for submission of deferred planning consents29th January5th February
Submission of Price-Maker Memorandum requests9th February16th February
Confirmation of entry, Duration at Price Cap, DSR Bidding Capacity & Price Maker uploads16th February22nd February
Mock Auction19th February25th February

By 15th and 22nd March 2021, the results for the T-1 and T-4 auctions should be known. TNEI have helped Client’s deliver their CMUs by acting as Independent Technical Expert (ITE), as required under the Capacity Market rules. Our role has included the preparation of Financial Commitment Milestone reports, interim progress reports, Substantial Completion Milestone reports, and more recently, Early Years Criteria reports.

As an independently owned consultant with significant experience in the energy industry across all technology types, TNEI is ideally placed to deliver the ITE role. Please contact us if you want to find out how we can act as ITE on your project or wish to discuss any other aspects of your CMU.