Ofgem believes that the objectives set out at the formation of the Capacity Market remain appropriate, a decade on from the scheme’s inception.
The regulator has launched a 10-year review of the Capacity Market and is seeking feedback on whether the rules and objectives of the scheme “remain appropriate, and whether they could be met with less administrative burden”.
The overarching objective of the scheme is to incentivise investment in secure and low-carbon electricity generation while improving affordability for consumers.
Ofgem’s consultation document adds: “We believe these overarching objectives are still relevant 10 years on for the CM framework and operation.”
It continues: “We believe that the rules and any amendments to the rules should have the objective of ensuring the efficient operation of the CM.
“The rules should not unduly form a barrier to entry or provide excessive regulatory burden that is not justified by, for example, the delivery assurance that a requirement may provide.”
While the regulator is not seeking proposals to solve issues at this stage, it has invited feedback on whether there are specific rules which it should investigate in future.
The consultation adds that rule change proposals can be submitted directly to Ofgem or preferably to the Capacity Market Advisory Group (CMAG) at a future stage.
The consultation document adds: “We believe that most change proposals will benefit from initial submission to CMAG as the proposals will be exposed to wider industry expertise and scrutiny earlier in the development process.”
The group was established in 2022 as part of an overhaul of the rule change process for the Capacity Market to make it “more dynamic and adaptive to changing market conditions”.
Explaining its decision in May 2022 to press ahead with the reforms, Ofgem said at the time the previous annual process had increased “duration, complexity, and difficulty,” with the timescales for developing, approving and implementing changes placing “significant burden and risk” on participants, delivery partners and itself.
The group is made up of 12 members, announced in August 2022.
The 10-year review consultation will run until 19 February.