The T-1 capacity market auction for delivery in 2025/2026 concluded with a notably low clearing price, shifting industrial and commercial customers focus to securing existing T-4 allocations. To this end, Enel X has T-4 allocations available for the same delivery year which were secured at auction four years ago at the higher clearing price of £30,590 per MW per year. This represents a 53% per MW premium on this year’s T-1 auction clearing price.
Wayne Davies, Head of Flexibility, UK and Ireland, for Enel X, said, “The low clearing price in today’s T-1 auction may give some businesses cause to think twice about enrolling in the 2025 / 2026 delivery year. What they may not realise is that they have alternative options that could see them earning up to £10,590 more per MW for the same period.”
“Having participated in every auction since the launch of the Capacity Market ten years ago, at Enel X we recognise the importance of taking a longer-term outlook. Thanks to this strategic approach, we can offer new clients Capacity Market positions for 2025 / 2026 which we secured four years ago in the T-4 auction when the price per MW was much higher. This approach also results in Enel X offering the highest market rates for the following two delivery years, meaning our clients will enjoy Capacity Market earnings of £158,590 per MW between the 1st of October 2025 and the 30th of September 2028.”
What does this mean in real terms?
The following example shows a comparison between what a Capacity Market participant could earn based on today’s T-1 auction price compared with Enel X pricing for the same period:
Large energy users with the ability to adjust their energy consumption, should electricity grid stability be at risk, can participate in the Capacity Market and get paid for their flexibility.
Energy generation assets, such as CHPs and back-up generators, or storage assets such as battery energy storage systems (BESS), are ideal candidates for the Capacity Market. It is also possible to participate by temporarily curtailing the electrical consumption of equipment such as compressors, HVAC and refrigeration units.
Reducing stress on the electricity grid helps to prevent interruptions to the electricity supply to homes and businesses nationwide. By managing their electricity flexibly, participating businesses receive significant financial payments for supporting grid stability. Flexible capacity can come from a single site or can be aggregated across multiple locations. There is no upper limit as long as sufficient positions are available. Payment is made to businesses registered to participate and is not subject to grid events occurring.
Participating in GB’s Capacity Market gives industrial and commercial businesses a significant advantage over non-participants by:
- Offsetting volatile energy prices and maintaining a competitive cost base;
- Achieving greater energy security and protecting business continuity;
- Accelerating their Net Zero ambitions and delivering on ESG commitments.
The Capacity Market mechanism exists to defend Great Britain’s electrical energy security by helping to balance supply with demand, especially during times of grid stress. Great Britain’s National Energy System Operator (NESO) views it as crucial for delivering a secure, sustainable, and affordable electricity system.
Enel X has been providing demand side response (DSR) services to Great Britain’s electricity system since 2009. The core offering in the UK and Ireland is built around maximising the commercial and environmental rewards available from energy flexibility programme participation. By optimising how and when energy is consumed, Enel X enables commercial and industrial scale energy users to extract value from the energy markets by leveraging their flexible energy assets in ways that support a greener, more stable and resilient electricity grid.
