Energy minister Greg Hands has confirmed the parameters for the next round of Capacity Market auctions in 2023.
The Department for Business, Energy and Industrial Strategy has also announced its decision to proceed with two temporary rule changes to increase liquidity in the auctions.
In line with the recommendations of both the delivery body – National Grid Electricity System Operator (ESO) – and the government’s Panel of Technical Experts (PTE), Hands has set the procurement target for the T-1 auction for delivery in 2023/24 at 5.8GW.
The target is 4.6GW higher than the 1.2GW originally set aside by the secretary of state for the T-1 auction.
Hands also followed the recommendations of the ESO and PTE for the 2026/27 delivery year, setting an overall target of 43.9GW. He put aside 1.5GW for the corresponding T-1 auction to leave 42.4GW to be procured through the four-year-ahead (T-4) auction.
The overall target is 0.2GW lower than the ESO’s forecast in its Electricity Capacity Report for 2021.
Meanwhile, BEIS has confirmed plans to implement two temporary rule changes to increase liquidity in the auctions and alleviate concerns that there may be insufficient capacity available to meet the procurement target for the T-1 auction for 2023/24.
It will firstly postpone the introduction of a statutory requirement for the independent verification of fossil fuel emissions by another year, having already done so once already. The department said the postponement is necessary due to delays to the accreditation of independent emissions verifiers (IEVs).
BEIS said UK Accreditations Service is now close to completing the accreditation of several IEVs but there are still risks of bottlenecks forming as applicants seek to access limited services in a compressed timeframe. It said this could prevent other eligible capacity from prequalifying for the auction.
The department will also amend a rule requiring existing generators to demonstrate their performance using operational data from the 24 months prior to the prequalification window.
The rule stipulates that existing generators must identify three settlement periods during the two years prior to the window in which the unit delivered a net output equal to greater than its anticipated de-rated capacity and report the operational data for each of those settlement periods.
The rule will be temporarily amended for the 2022 prequalification window to enable plants that have been mothballed for the previous two years to instead submit performance data from the most recent 24 months of their operation.
BEIS clarified that the rule changes will not affect the bar on unabated coal generators participating in the Capacity Market from October 2024.