This will allow foreign energy companies to contribute to the governemnt’s target volume of 45.4GW for delivery in 2019-20 through this year’s auction.
Eon argued that interconnectors should not be included in the capacity market because they are transmission not generation assets. In its hearing summary as part of the Competition and Markets Authority energy market investigation, the firm said it “did not support” the inclusion of interconnectors in the capacity market “due to how these were being treated for these purposes”.
RWE said it thought the current arrangements for including interconnectors in the mechanism on the basis of their ownership is “flawed”.
Centrica said it had “concerns” about interconnectors being allowed to take part in the capacity auction, although it would be “wrong to completely exclude them”.
However, the Department of Energy and Climate Change (Decc) insisted that the inclusion of interconnectors will “increase the competitive pressure on the auction clearing price” and help ensure security of supply “at the lowest cost to consumers”.
Decc today published its parameters outlining the criteria for energy suppliers to apply and partake in the next capacity market auction, expected to take place in December this year. These include the updated de-rating factors for interconnectors. The aim of the auction is to “ensure the UK has sufficient capacity to meet electricity demand for 2019 and 2020”.
Energy minister Andrea Leadsom said the government “has a plan to power the country” so that people and businesses can be “confident that the lights will stay on, not just this winter but in the years and decades ahead”, at the “lowest possible cost” to bill payers.
“We’re building a new generation of clean, secure and affordable energy supplies, and are doing all that we can to help innovative technology to thrive,” she added.
The UK currently has 4GW interconnection to Europe and the government says it has a “clear policy” of “at least 5 GW of extra interconnection”. Read Utility Week’s analysis of UK interconnection here.