Regulator Ofgem has announced the setting up of an independent advisory group on Britain’s Capacity Market.
The CM is the marketplace which establishes values payable to generators or storage contractors offering capacity at times of network shortages, both anticipated and unexpected.
More dynamic management of the CM, enabling it to react faster to changing market conditions, and delivering operational decisions with greater transparency, head the rationale for the new group.
Every one of the 18 respondents answering Ofgem’s three-month consultation agreed that reform is needed.
Irreversible radical reshaping of Britain’s power landscape towards distributed generation provided from intermittent renewables places ever greater importance on the Capacity Market. When the wind doesn’t blow, and the sun shines too little, the CM picks up system slack, to ensure the nation’s lights stay on.
The problem for Ofgem has been that changing CM rules has increased in duration, complexity and administrative burden since its inception alongside the Capacity Market in 2014.
The regulator first told the industry in April 2019 that the CM needed reform. It ran a workshops and in January invited written evidence.
“We expect the Capacity Market (advisory group) to be a route to establish industry’s priorities for CM Rules changes and to facilitate industry participants to collaborate effectively to identify the most beneficial changes”, the paper says.
“We hope to work collaboratively with CMAG and industry going forward in order to establish these priorities and to effectively deliver CM Rules changes that have a positive effect on the operation of the Capacity Market”, it adds.
Endorsing the view of 14 of the 18 stakeholders who replied, the regulator confirmed power trading Elexon, overseers of the Balancing and Settlement Code, as convenor and administrator to the CMAG group. A modification to the BSC is needed to rubber-stamp the appointment.
Elexon’s chief executive Simon McCalla said: “The CM plays an important role in securing electricity supplies and we are very pleased that Ofgem has confirmed that Elexon will take on the CMAG secretariat role. We already work closely with BSC Parties to develop and consult on reforms to the BSC, and we can apply this significant expertise and experience to managing the CMAG on behalf of Ofgem, for the benefit of industry parties and consumers.”