The auction resumed this morning (2 February) in the ninth round of bidding, which covers the price range £35 to £30 per kilowatt per year (/kW/yr). Roughly 4GW of surplus capacity is still to drop out.
The “Dutch-style” descending clock auction, sees the asking price gradually reduced as bidders decide whether to accept or decline the offer. Once the remaining capacity matches the procurement target the auction clears and those still left are offered an agreement at the clearing price.
The procurement target for the auction was set at 53.6GW, but in practice the target actually varies slightly, with additional capacity being procured if the auction clears at a low price. Around 59.3GW of capacity entered the auction on Tuesday.
Yesterday’s bidding saw around 1GW of capacity exit the auction as the asking price fell from £55-£35/kW/yr.
Consultancy firm Smartest Energy has told Utility Week it expects the auction to clear at less than £25/kW/yr, putting it in line with the most recent four-year-ahead (T-4) auction in December, which cleared at £22.50/kW/yr.
Capacity Market Early Auction: Progress after second day of bidding
Source: National Grid