Ofgem outlines changes to capacity market rules


Ofgem is consulting on changes to capacity market (CM) rules that will have a material bearing on participation.

The regulator asked for proposals last September. It received 112. Of these, it plans to take forward 38.

Some good news for demand-side response (DSR) providers is that Ofgem will draft new rules that afford them more flexibility in how they meet their commitments.

Meanwhile Scottish Power’s proposal to effectively de-rate DSR where it uses behind the meter battery storage came too late for this round of rule changes.

However, Ofgem will consider the matter further, with a view to revealing its intentions next year.

Potentially bad news for those looking to bring new distribution connected wind and solar into the CM is that Ofgem will further consider a suggestion from Engie that would require to connections to be firm, i.e not subject to curtailment.

However, Ofgem said it thinks bringing non-subsidised renewables into the auction could be beneficial to consumers, so it may decide to de-rate such generators rather than rule them out all together.

One accepted proposal from Alkane and Welsh Power is around secondary trading. If implemented, it will allow firms to switch or trade their agreements to other generating units, provided they meet all necessary rules ahead of the delivery year.

The regulator believes this will reduce the risk of non-delivery, which is becoming a concern in some quarters, and thinks it will be able to spot any attempts to ‘game’ the system.

Ofgem also proposes changes to rules that prevent existing generators that opt out of T-4 auctions because they think they might be closed by the delivery year from bidding into T-1 auctions later on.

That change was floated by EPUKI, which represents the UK interests of Energetický a průmyslový holding (EPH), the Czech energy firm which recently bought Centrica’s Langage and South Humber Bank CCGTs.

The regulator is also minded to take forward a number of proposals around testing, performance and how the auction itself functions in terms of volume visibility to participants.

The regulator seeks comments by 3 May and will hold a stakeholder workshop on 24 April.

See details here.

Related stories:

Aurora: Bring unsubsidised renewables into capacity market to save money

Capacity market outtturn a turn off for batteries

T-4 capacity market clears at £8.40, lowest yet

T-1 capacity market auction clears at £6/kW

Medium Combustion Plant Directive takes back-up generators out of DSR

Battery storage cut down to size as gigawatts qualify for capacity market

Half of small generators ‘could give up capacity market contracts’ after Triad cuts

Businesses ‘shutting down from 4-7pm due to peak power costs

Capacity market ‘buying the wrong stuff because it’s joined up with nothing’

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