Capacity auction target buys confirmed

Main four-year-ahead auction for 2021/22 will secure 50.1GW of capacity

The procurement targets for the two capacity market auctions due to take place over the coming winter have been confirmed by the business and energy secretary Greg Clark.

The main four-year ahead (T-4) auction for delivery in 2021/22 will purchase 50.1GW of capacity. The total target volume for the year - excluding previously contracted capacity - is 50.5GW, of which 400MW has been set aside for a future year-ahead (T-1) auction.

The figure is consistent with the recommendation made by the delivery body, National Grid, in its electricity capacity report for 2017 and represents an 800MW increase over the analysis for 2020/21 in the previous report.

The increase is down to a 1.1GW rise in the capacity requirement - mainly due to higher peak demand - offset by a 0.3GW elevation in the assumed volume of capacity which is ineligible to participate in the mechanism. The auction is scheduled to begin on 6 February 2018, several months later in the year than previous rounds.

The T-1 auction for delivery in 2018/19 will procure 6GW of capacity -  a 300MW reduction on National Grid’s recommendation of 6.3GW. In a letter to Cordi O’Hara, the director of the UK system operator, Clark explained that his decision to deviate from their suggestion was based on advice from his own panel of technical experts.

The procurement target recommended by National Grid includes 2.5GW which was set aside from the T-4 auction for 2018/19.  National Grid raised the figure by 3.8GW to incorporate a 7.9GW jump in the capacity requirement as well as a 4.1GW increase in the assumed volume of ineligible capacity. The auction will begin on 18 January 2018. 

Author: Tom Grimwood,
Channel: Markets & Trading , Policy & Regulation

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