Energy minister sets out parameters for next capacity auctions

They include the T-1 auction planned for January 2021 and the T-4 auction for February 2021

The Department for Business, Energy and Industrial Strategy (BEIS) has set out the parameters for the next Capacity Market (CM) auctions to ensure the UK continues to have sufficient electricity capacity to meet demand.

A letter from Business, Energy and Clean Growth Minister Kwasi Kwarteng confirms the parameters for the next CM T-1 auction planned for January 2021 and the T-4 auction planned for February 2021.

A target capacity of 0.4GW has been set for the T-1 auction for the 2021/22 delivery year, despite National Grid Electricity System Operator (NG:ESO) recommending a target capacity of 0GW in its Electricity Capacity Report 2020 (ECR).

Mr Kwarteng believes BEIS’ target is justified because of the “uncertainty and potential risks from the ongoing COVID-19 pandemic; recent prolonged plant outages; and compliance with our long-standing commitment to set a target capacity for T-1 auctions, which is at least half the capacity that was set-aside when determining the target capacity for the T-4 auction for the same delivery year”.

A total target capacity of 41.2GW has been set for the T-4 auction for the 2024/25 delivery year.

This does not take into account any potential impacts from the COVID-19 pandemic, in line with the ECR recommendation.

The energy minister added the parameters for the auctions may be adjusted following the auction prequalification and any related appeals processes.

The auctions will provide contracts to energy storage operators, back up generators and other flexible technologies and services that can guarantee electricity capacity for the grid.

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