Capacity Market T-1 review

The Capacity Market Auction (CM) was introduced by the UK Government as part of the Electricity Market Reform Programme to ensure the future security of our electricity supply. The Capacity Market offers al Capacity Providers a steady, predictable revenue stream on which they can base their future investments. In return for such revenue, providers must deliver energy at times of system stress.

The T1 Capacity Market Auction for Delivery Year 2024/25 went live on 20th February 2024.The auction opened with a target capacity of 7.7 GW.

9.9 GW of derated capacity had qualified for the T-1 Capacity Market auction for the delivery year 2024/25, of which 9.5 GW has confirmed entry.

The auction starts at ￡75/kW (the price cap) and each round reduces the price by ￡5/kW, with capacity exiting the auction until the capacity remaining meets the procurement requirements.

The auction cleared in Round 8 (￡35-￡40) with the provisional clearing price being published at ￡35.79/kW for all contracts awarded. ?The final auction results and report will be published on the 1st March.

Flexitricity has 11 CM Units (CMU) in this auction, adding up to 47.253MW of potential contracts.?This includes Existing Generating, Existing Generating – Storage, Proven DSR, and Unproven DSR CMUs.

The 2024 T-1 Auction has procured the highest ever capacity (provisionally 7640MW) since the market started in 2016, awarding contracts to 81% of the Qualified Capacity. It has also awarded contracts to the highest number of CMUs, with 277 units from 109 participants.

Flexitricity have participated in 8 out of the 9 T-1 Capacity Market auctions, only sitting out 2017/2018, which was the lowest capacity procured by this auction, procuring only 312MW in total. Each year we have contributed at least 20MW of capacity to this market.

The prices seen in the T-1 auction have varied massively since it’s launch, with a low of ￡0.77 in the 2019 auction, for 2019/2020 delivery, to a high of ￡75.00 in 2022 (for 2022/2023 delivery), which is the price cap for this auction. The 2024 action cleared at ￡35.79, which is the lowest we have seen since 2020.

Flexitricity has a dedicated team who manage the full end to end management of the Capacity Market, from prequalification, auction administration and agreement management. Get in touch with us today to find out how your assets could participate.