Warning: Undefined array key "HTTP_REFERER" in /var/www/vhosts/tomorrowuk.net/httpdocs/wp-content/plugins/cornwall-insight/inc/cookie.php on line 52

Warning: Undefined variable $field in /var/www/vhosts/tomorrowuk.net/httpdocs/wp-content/plugins/cornwall-insight/inc/training.php on line 442

Warning: Undefined variable $field in /var/www/vhosts/tomorrowuk.net/httpdocs/wp-content/plugins/cornwall-insight/inc/teams.php on line 113

Notice: Function WP_Scripts::localize was called incorrectly. The $l10n parameter must be an array. To pass arbitrary data to scripts, use the wp_add_inline_script() function instead. Please see Debugging in WordPress for more information. (This message was added in version 5.7.0.) in /var/www/vhosts/tomorrowuk.net/httpdocs/wp-includes/functions.php on line 5835
Editor's Pick | Lower procurement targets recommended for 2020 CM - tmrw. test

Editor’s Pick | Lower procurement targets recommended for 2020 CM

National Grid Electricity System Operator (ESO) has issued its updated recommended procurement targets for the upcoming Capacity Market auctions. For all three auctions, the recommended capacity level was lower than the target previously confirmed by the Secretary of State (SoS).

A series of reports, published on 9 January, set out the ESO’s revised recommendations of capacity to be procured through the upcoming T-1, T-3 and T-4 auctions.

For the T-1 auction, the ESO recommended a revised procurement target of 0MW, down from the previous confirmed procurement target of 300MW. In its previous recommendation to government the ESO also recommended a target of 0MW. However, the SoS subsequently increased the target to 300MW to account both for non-delivery risks that they felt hadn’t been accounted for in the ESO’s modelling; and to meet the government’s commitment to set targets for T-1 auctions at a level at least half the original set-aside value.  

The ESO’s report noted the outcome of its original Least Worst Regret calculation for the auction resulted in a target of -1,300MW. Since this analysis, 450MW of capacity has expressed its intention to remain open during the Delivery Year, but not compete for a Capacity Agreement.

This was not accounted for in the original modelling and so further lowered the amount of capacity that the ESO suggested needed to be procured, but as the level remained negative it was capped at 0MW.

In the updated Auction Guidelines document dated 9 January the target level of capacity remained 300MW.

For the T-3 auction the current confirmed target capacity is 44.2GW. In its updated recommendation the ESO suggested a slightly lower target of 44GW. Similarly, the recommendation for the T-4 auction was also reduced by 200MW, down from 43.5GW to 43.3GW.

In both cases the reduction was due to National Grid forecasting a combination of 100MW less autogeneration capacity operating outside of the Capacity Market and 300MW (rounded) of capacity that will hold long-term STOR contracts during the delivery year. These generators are not allowed to hold Capacity Agreements for the same delivery period.


 
Both of these targets have been reflected in the updated Auction Guideline report.

The effectiveness of running T-1 auctions for relatively low amounts of Capacity where prices may also be low will need revisiting. The reduction in capacity being targeted in the T-3 and T-4 auctions will make them more competitive but overall the change isn’t too material.

If you have enjoyed reading James’ views and want to read about the latest developments in the energy market, please contact us for a month’s trial of Energy Spectrum.

Energy Spectrum is a weekly publication covering all of the key policy, regulatory, market and transactional developments across the energy sector. It offers a timely, insight-driven overview of the need-to-know news and changes in the energy sector. Contact the Editor, Nick Palmer to request a trial on 01603 604400 or click the link below.

Related thinking

Regulation and policy

Electricity transmission charging reform – overtaken by changing priorities?

Charging for the transmission network is never out of the development process for long. From major reviews, such as that initiated under Project Transmit in 2010, to significant reforms such as removing the triad benefit from distributed generation in 2018, and a host of smaller developments, change seems the only...

Energy storage and flexibility

Glory Days – T-1 auction clears at £45/kW

To say the T-1 Capacity Market (CM) auction clearing at £45/kW per year was a surprise feels like an understatement. It looks like a major windfall for successful participants in the auction –  many are asking just what happened? Easy money Until February, it looked like prices would clear at...

Announcement

The top 5 podcasts of 2020

We released 13 podcasts in 2020 covering all aspects of the energy market, from the Capacity Market and Electric Vehicles to Faster Switching and heat networks. Here are our top five podcasts of the year, ranked by the number of people who listened. 5. The Impact of COVID-19 on System...

Home supply and services

COVID-19-driven changes to electricity Third Party Charges

The impact of COVID-19 on the energy sector has been a hot topic for the last few months. As we progress further into the UK’s lockdown period we are now beginning to piece together the wider picture of effects across energy Third Party Charges (TPCs). These impacts are expected to...

Low carbon generation

Flexible Asset PPAs – more capacity, more competition

The Power Purchase Agreement (PPA) market for flexible assets in the last six months has both grown in size and seen increased levels of competition as new offtakers and optimisers make themselves known in the market. What do we mean by the PPA market for flexible assets? We mean the...

Low carbon generation

Lessons from a lock down

We are all facing a new, simpler existence. For my part, I have been self-isolated for three weeks. My little flat in central London has become almost my entire existence, my days have settled into a simple routine, and I've had plenty of time to reflect. Although COVID-19 presents an...

Net zero corporates and ESG

Editor’s Pick Ireland | Clean Energy Package: what does it really mean?

The Capacity Market Code removes or restricts payments to fossil fuel generators and allows cross border participation in Capacity markets, arising from the Clean Energy Package (CEP). We look at some of the other potential changes in the way EirGrid and SONI operate our energy system arising from the implementation of the...

Low carbon generation

Editor’s Pick | The green shoots of the Capacity Market auctions

A pivotal year for the Capacity Market (CM) draws to a close, with the first long-term auctions for capacity since 2018. But for once the CM is the least interesting thing happening in the market, and the scheme itself seems out of step with the net zero future. In this Energy...

This site is registered on wpml.org as a development site.