Capacity auction enters second day

The latest four-year-ahead (T-4) capacity market auction has entered its second day with a remaining surplus of 16GW.

The auction – which will secure the capacity needed to keep the lights on in 2020/21 – made it through four rounds of bidding yesterday.

As a Dutch-style descending clock auction, it sees bidders either staying-in or dropping out as the asking price is incrementally reduced until the target is met and the auction ends. All remaining capacity receives contracts at the ‘clearing price’ at which the auction ended.

The total de-rated capacity to enter the auction was 69.8GW – around 18GW above the procurement target of 51.7GW.

The surplus fell to 16GW in the fourth round of bidding as the asking price was reduced from £60/kW/yr to £55/kW/yr. The auction resumed today at 9am on the fifth round of bidding which covers the price range £55/kW/yr to £50/kW/yr.

The auction’s progression so far: 

Source: National Grid