Capacity Market: guess who’s back, back again!

In our latest podcast, experts Emma Burns and Tom Edwards discuss the recent developments on the Capacity Market since its reinstatement announcement on 24 October 2019.

The Capacity Market (CM) is a mechanism that ensures there is electricity available by providing payments to generators. Consequently, this encourages continued investment in capacity. It gives generating and demand-side capacity regular payments. In return, capacity is incentivised for the capacity to be available when the system requires it (Capacity Market ‘stress events’).

The Capacity Market was introduced following the government’s Electricity Market Reform program. The first auction for capacity was in 2017. In November 2018, a judgment of the General Court of the CJEU annulled the European Commission’s July 2014 State aid approval. This judgment meant that the CM entered into a period of standstill. As a result, the Electricity Settlements Company (ESC) did not collect any capacity payments from suppliers. Consequently, ESC did not make any payments to the generators. 

Following an investigation by the European Commission (EC), the EC confirmed its decision to reinstate the Capacity Market in Great Britain.

In summary, Tom Edwards and Emma Burns discuss:

  • what led to the suspension Capacity Market in 2018
  • the outcome and implications of the suspension
  • what changes the government has now committed to
  • the future

Below is a 90-second extract from our full podcast. Hear the full podcast on the Capacity Market through the link below.

Capacity market forecast

Our Capacity Market Forecast Report gives a view on short-term and long-term auction prices. In time with upcoming auctions, we update and release our subscription report throughout the year. It provides developers, asset owners and advisors with an in-depth assessment of potential auction prices and dynamics.

Utilising modelling from our long-term wholesale market model, the report also allows subscribers to understand possible bidding behaviours and adapt their strategies in auctions. For more information on the CM forecast report, please contact Lee Drummee at Alternatively, view our website here.

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