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Energy Blog Security of Supply Auctions – Record Low Prices

Security of Supply Auctions – Record Low Prices

Chris Hurcombe
by Chris Hurcombe March 8, 2018
t-4 cm results by type

The government has welcomed the results of its Capacity Market auctions which have secured future energy supplies at record low prices for homes and businesses.

The T-1 Capacity Market auction, for delivery in 2018-19, cleared in line with expectations at £6.00/kW. This was followed by the T-4 Capacity Market auction, for delivery in 2021-22, which cleared well below previous four-year ahead auctions at £8.40/kW.

Existing capacity leads the way

Across the two auctions, a combined 56.22GW was procured – 5.8GW within the T-1 auction and 50.42GW coming within the T-4 auction. In both cases, existing capacity was most successful – securing 81% of agreements in the T-1 auction and 86% in the T-4 auction.

Combined Cycle Gas Turbines (CCGT) were the most successful technology type in both auctions, accounting for the most agreements – 38.21% (2,215MW) in the T-1 and 45.66% (23,022MW) in the T-4.

Interconnector successes

The four-year ahead auction saw nuclear (15.72%) as its next most successful technology, while interconnectors (9.04%) secured a record amount of capacity. A total of 4.6GW of interconnectors won agreements. This figure included existing links to France, the Netherlands and Northern Ireland, as well as 2.2GW of new build interconnectors. Unproven demand-side response (DSR) (1,160MW) and new build generation (762MW) made up the rest of 4GW worth of prospective capacity to be awarded agreements in the auction.

In both auctions, the final results showed a slight increase in battery storage capacity – 15.3MW in the T-1 auction, while the T-4 auction saw the storage capacity procured rise marginally from 2,675MW to 2,680MW.

While the T-4 auction has secured over 50GW of capacity, the record low clearing price means little new build is coming through the auction.

*Source: EMR Delivery Body