The delayed capacity market auction for the coming winter has cleared at a price of just £0.77/kW – a new record low.
The year-ahead (T-1) auction for delivery in 2019/20 was originally scheduled for January but was postponed in November after the capacity market was suspended due to a landmark EU court ruling.
Capacity market auctions are conducted using the descending clock format, with bidders dropping out as the price is lowered until the remaining capacity matches the procurement target. The latest round began on Tuesday morning and ended yesterday (12 June) in the 15th round, covering the price bracket £0-5/KWh.
The auction was massively oversubscribed. More than 9.4GW of de-capacity entered but only 3.6GW – or 38.5 per cent – secured an agreement. Contracts were awarded to 129 capacity market units put forward by 58 companies.
Interconnectors accounted for over a third of the winning capacity – the existing Moyle and East-West connections with Ireland (345MW) both secured agreements as did the newly-opened Nemo Link interconnector to Belgium (680MW). Nearly a half (1.7GW) consisted of existing generation and new build generation accounted for a sixth (640MW).
Breakdown by fuel
Gas generation made up the lion’s share of both winners and losers. More than 2GW secured contracts and almost 2.6GW dropped out.
Among the winners was the only new build combined-cycle gas turbine (CCGT) to enter – Centrica’s previously mothballed King’s Lynn plant in Norfolk (330MW). However, two existing CCGTs, with a combined capacity of 1.4GW exited. Three existing open-cycle gas turbines (831MW) also won contracts.
Reciprocating engines secured agreements for more than half a gigawatt of capacity – 319MW of existing generation and 234MW of new build installations. They included nearly 5MW of diesel engines, with the rest being fuelled by gas. Almost half a gigawatt failed to secure an agreement, including 230MW of new build generation.
Demand-side response fared poorly. Of the more than 1.3GW that entered, just 195MW was successful. The same was true for batteries, with 133MW exiting and 23MW remaining until the end. EDF Energy’s West Burton plant (1.7GW) – the only coal-fired power station to enter the auction – also missed out on a contract.
Capacity procured over all auctions to date