The capacity market auction for guaranteed power in four year’s time has cleared at £8.40/kW.
The result is significantly lower than the previous T-4 auctions, which ranged between £18 and £22.50/kW – and well below virtually all analyst forecasts.
Procurement of around 50GW was targeted, with 74GW of derated capacity, most of the UK’s generation fleet, plus interconnectors, bidding to secure agreements.
Existing large thermal plant took the lion’s share of agreements and many of those generators regard the CM as effectively a top-up payment, enabling them to accept low prices.
Large new build generators would require much higher rates, given the impact of renewable generation on their running hours and predictable revenues. That means government probably has to redesign the policy if it still wants to encourage investors to put their money into big gas power stations.
Last week the T-1 capacity market auction also cleared lower than the previous iteration, at £6/kW.
The EMR delivery body will publish the provisional results breaking down the auction by technology type at 7.30am Friday. See this link for details.
Story and headline were updated 7pm Thursday to reflect the actual clearing price of £8.40/kW from indicative range of £5-£10/kW.
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