Ofgem aims to lighten the admin burden for power providers as part of its five-year review of the Capacity Market. It said the complexity of the current rules represent a barrier to entry and may lead to inefficient auction outcomes.
The regulator plans to improve secondary trading of capacity agreements and make it easier for successful bidders to switch configuration of units provided they still deliver the agreed amount of capacity.
Ofgem will also use the review to revisit National Grid’s incentives now that the Electricity System Operator (ESO) is legally separate. “We believe that it may be desirable to align NGESO’s financial incentives for the CM more closely with the wider Electricity System Operator (ESO) incentives,” it stated.
The regulator framed the review in the context of the current market suspension following the Tempus ruling. It said proposed amendments to the rules are subject to the outcome of the EU’s subsequent state aid investigation.
Ofgem said the ruling had left it with “resource implications”, which is why the consultation is behind schedule and some planned changes will be delayed.