The UK’s auction to ensure enough electricity capacity for 2022/2023 cleared at a record high of £75 per kW per year on Tuesday evening.
That was the outcome of the Capacity Market’s T-1 auction which was reported by the National Grid ESO.
The price beat the previous record set in the T-1 auction for 2021/2022 of £45 per kW/year.
The report notes that 4,996MW of de-rated capacity was procured across 226 Capacity Market Units.
The awarded capacity for the T-1 2022/2023 will come from gas (3,385MW), from demand side response (516.8MW), from coal (411.1MW), from battery storage (385.3MW), from waste (101MW), from pumped storage (85.1MW) and from other sources.
The Capacity Market is a mechanism introduced by the government to ensure that electricity supply continues to meet demand as more intermittent and unpredictable renewable generation plants come on stream.
In the T-1 auction, potential Capacity Market participants can bid for contracts in auctions held one year ahead of the delivery date.
EnAppSys Director Phil Hewitt said: “The high clearing price keeping units online that may otherwise have been retired bodes well for the stability of the market this year in comparison to the winter just passed.
“It is unlikely that clearing prices as high as this will be repeated in the near term as the high price was driven by very particular events. This will have brought forward the start dates for several new build projects to make the most of the high prices.
“Many people in that auction would have settled for a lower price. It feels like the billpayers may have overpaid for capacity.”
Commenting on the capacity auction prices, Sue Ferns, Senior Deputy General Secretary of trade union Prospect, said: “The record-high prices in the latest Capacity Market auction are yet another sign of how our energy security has been undermined by a persistent failure to properly plan for when the wind doesn’t blow and the sun doesn’t shine.
“This is an urgent wake-up call to government to get on with the job of delivering a new fleet of nuclear reactors that can provide the always-on, low-carbon power we need to complement renewable energy.”