The parameters for the next Capacity Market (CM) auctions to ensure the UK continues to have sufficient electricity capacity to meet demand, have been set out by The Department for Business, Energy and Industrial Strategy (BEIS).

In a letter from Kwasi Kwarteng, Minister for Business, Energy and Clean Growth, he confirms the parameters for the T-4 auction planned for February 2021 and the next CM T-1 auction planned for January 2021.

Despite National Grid Electricity System Operator (NG:ESO) recommending a target capacity of 0GW in its Electricity Capacity Report 2020 (ECR), a target capacity of 0.4GW has been set for the T-1 auction for the 2021/22 delivery year.

BEIS’ target is justified believes Mr Kwarteng, because of the “uncertainty and potential risks from the ongoing COVID-19 pandemic; recent prolonged plant outages; and compliance with our long-standing commitment to set a target capacity for T-1 auctions, which is at least half the capacity that was set-aside when determining the target capacity for the T-4 auction for the same delivery year”.

For the T-4 auction for the 2024/25 delivery year, a total target capacity of 41.2GW has been set.

In line with the ECR recommendation, this does not take into account any potential impacts from the COVID-19 pandemic.

The parameters for the auctions may be adjusted following the auction prequalification and any related appeals processes, the energy minister added.

The auctions will provide contracts to energy storage operators, back up generators and other flexible technologies and services that can guarantee electricity capacity for the grid.

Parameters for new capacity auctions set out

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