Higher penalties and increased credit cover for capacity market providers


whitehallGovernment plans to increase credit cover requirements to £10k/MW for new build generators awarded capacity contracts, but not at present for unproven DSR.

Existing capacity market units will not need increased credit cover.

The department of energy and climate change (Decc) has also increased termination fees for generators that fail to honour the terms of their contract. It will also increase the tiering of the penalty charge regime. However it has decided not to add higher penalties for serial offenders, nor a multiplier for penalties for breaches of multiyear agreements.

Disqualified sites will basically have to be sold on to be allowed back in to the capacity market, unless they reduce their Transmission Entry Capacity (TEC), as that would prevent other owner-operators from fully utilising them. Those sites will face two-year disqualification.

The rule changes come as government tries to make it harder for capacity providers to renege on contracts and make speculative bids for support.

Decc also flagged another rule change for new build generators bidding into the market. It will consult later this year on requiring any new build capacity market unit that has benefitted from certain tax advantages to have payments deducted in line with State aid rules.

See the full consultation response here.

Related articles:

National Grid, aggregators and suppliers join The Energyst for DSR Event

Early capacity market to drive up business energy bills

Capacity market rule changes create opportunities for businesses that can turn down power use

Major changes planned for capacity market

Protection for energy intensives ‘will add 7% to third party costs on business energy bills’

Click here to see if you qualify for a free subscription to the print magazine, or to renew.

Follow us at @EnergystMedia. For regular bulletins, sign up for the free newsletter.


Please enter your comment!
Please enter your name here