UK capacity auction hailed as success

• 9 years ago (2014-12-19)
• Junior Isles

Europe 1061

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The UK’s Capacity Market auction undertaken by National Grid has contracted 49.26 GW of capacity to provide backup power in the year 2018/19. The contracted amount falls slightly short of the intended capacity procurement of 50.8 GW but was hailed as a success.

These are provisional results of the auction. All capacity agreements are subject to final confirmation from the Department of Energy and Climate Change, which is expected no later than 5 January 2015.

The provisional result of the tender set a clearing price of £19.40/kW, which will be paid as a fixed sum to flexible power stations to guarantee their availability on top of any power they produce.

The government expected to encourage new gas-fired power stations to be built under new 15-year contracts and combined cycle gas turbine plants accounted for 22.3 GW (just over 45 per cent) of the contracted capacity. However, many of the contracts have been awarded for only one year, with 68 per cent of the capacity to be provided by existing power stations. Only 5 per cent will come from new build.

The UK government hailed the auction as “fantastic news” for bill-payers and businesses. Ed Davey, Secretary of State for Energy and Climate Change, said: “We are guaranteeing security at the lowest cost for consumers. We’ve done this by ensuring that we get the best out of our existing power stations and unlocking new investment in flexible plant.”

The Capacity Market auction is just one part of the government’s strategy to drive new investment and secure energy supplies in the short, medium and long-term.