T-4 capacity auction clears at record high price

The four-year-ahead (T-4) Capacity Market auction has cleared at a new record high price of at least £60/kW/yr.

According to National Grid Electricity System Operator (ESO), the descending-clock auction for delivery starting in 2026/27 cleared in the third round covering the price range £60-65/kW/yr. At the time of publication, the ESO had yet to publish the full results.

The clearing price of at least £60/kW/yr is around double the previous high of £30.59/kW/yr seen in last year’s T-4 auction.

The highest ever price for a Capacity Market auction came during last year’s year-ahead auction (T-1), which for the first time cleared at the maximum possible price of £75/kW/yr. The latest T-1 auction, which took place earlier this month, cleared at £60/kW.

The procurement target for the latest T-4 auction was set at 43.9GW of de-rated capacity, although the exact amount procured is determined by a demand curve, with more capacity being contracted at lower prices. Just over 46GW of de-rated capacity entered the auction.

According to the ESO’s latest update, the potential clearing capacity at the £60/kW/yr price floor for the third round was almost 43.3GW. At these levels, the annual cost of the auction during the first delivery year would be nearly £2.6 billion, although this number would be substantially lower in subsequent years as existing generation is only able to bid for one-year contracts.