National Grid has procured almost 803MW of extra power capacity to cover winter 2016/17, when the system is expected to be at its tightest for some years. Around 475MW will be delivered by unproven demand-side response units.
The first of the transitional arrangement capacity auctions closed last night with 802.710MW in contracts awarded at a clearing price of £27.50 kW/year. That is a higher clearing price than awarded to capacity providers in earlier auctions, but the delivery period is much closer – i.e. for the coming winter rather than towards the end of this decade.
Those awarded contracts can choose to either deliver the full amount of capacity agreed, or a time-banded amount (payable at a rate equal to 70% of the auction clearing price). They have to make that choice by close of play today, which means that the full cost of securing extra headroom in the power system will not be known until this evening. However, National Grid said the maximum cost would be £22,074,525 while the minimum cost would be £15,452,168. It will confirm the cost in a final report. Meanwhile, results remain provisional for the next eight working days until they are signed off by the Secretary of State.
The lion’s share of the contracts (59%) went to unproven demand side response units. CHP and auto-generation took the next biggest share, with 274MW in contracts awarded, representing roughly a third of the total. Around 146MW of demand side response exited the auction as the price fell below what they were prepared to be paid for their services.
Of the aggregators of unproven demand side response units bidding for contracts, Kiwi Power took the most in megawatt terms (173.6MW), over a fifth of the total auction.
Other successful unproven DSR bidders include: Enernoc (65.1MW); EnergyPool UK (59.8MW); EDF (47.74MW); Flexitricity (39.9MW); Smartest Energy (19.9MW); and Eon (10.4MW). The largest DSR contracts awarded to non-energy companies or aggregators went to Tata Steel (15MW) and BOC (14MW).
Meanwhile REstore secured around 12% of the total capacity auctioned via the two largest existing generating capacity mechanism units. It will provide some 94.2MW from CHP engines.
See the full provisional results here.