The T-4 Capacity Market auction for the delivery year 2027-28 concluded on February 27th, 2024, revealing a clearing price of £65/kW/year, exceeding the previous record set in last year’s auction.
Fintan Devenney, Senior Energy Analyst at EnAppSys, highlighted the narrow margin of capacity above the demand curve, with 43.3GW entering against a target of 44GW.
Notably, certain new-build gas assets did not participate, resulting in a combined 700MW of capacity not securing contracts.
Additionally, approximately 250MW of capacity from smaller assets also exited in the first two rounds.
Fintan Devenney, Senior Energy Analyst at EnAppSys, said: “This year’s T-4 Capacity Market auction for delivery year 2027-28 cleared on 27th February 2024 at 10.45 after just two rounds of bidding with an all-time high clearing price of £65/kW/year.
“This is slightly higher than the £63/kW/year set in last year’s T-4 auction for delivery year 2026-27, which was itself a record high at the time.
“Going into the auction, the margin of capacity above the demand curve was the lowest ever seen in a T-4, with 43.3GW entering against a target of 44GW. Having pre-qualified prior to the start of the auction, the Killingholme new-build CCGT unit did not enter the auction, while Eggborough OCGT, another new-build gas asset, exited in the first round, meaning their combined 700MW did not secure contracts.
“A further ~250MW of capacity from smaller assets also exited in the first two rounds and, combined with the exit of Eggborough OCGT, this was enough to cause the auction to clear at an all-time high price as total capacity supply dropped beneath the demand curve.
“Almost 1000MW of new-build battery assets secured 15-year contracts at this all-time high price.”
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