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Latest Developments – UK Government Capacity Market

The Capacity Market is the Government’s main mechanism to ensure that the GB electricity system remains secure by ensuring sufficient reliable capacity is in place to meet demand. Here are the latest developments on the Transitional Arrangement Auction and the Capacity Market Consultation.

Capacity Market Transitional Arrangement Auction

Last week Government held the 2nd Transitional Arrangements (TA) Auction for ‘turn-down’ DSR. The provisional results from last weeks auction are that it secured 312MW of turn down DSR for delivery in 2017/18 with a clearing price £45/kW. Final auction results are confirmed eight working days after the auction concludes.

The TA auctions are designed to offer targeted support to Demand Side Response (DSR) to increase levels of participation in the full Capacity Market auctions. This 2nd auction focused specifically on turn-down DSR and was therefore not open to behind the meter generation.

Government Response to Capacity Market Consultation

Last week BEIS published its response to the October Capacity Market Consultation. The consultation largely sought views on a number of technical changes to the Capacity Market rules and regulations.

Included in the consultation was a proposal to change the basis for collecting the Capacity Market supplier levy from being based on net demand to being based on gross demand. The existing arrangements were seen as providing an unfair advantage to small embedded generation who could benefit from helping customers avoid the CM Supplier Levy, as well as participate in the Capacity Market auctions. Government has confirmed their intention to implement this change.

In addition Government concluded that almost all the other proposals in the consultation should also be implemented with the exception of a change to the level of credit cover required for DSR (where Government will seek further evidence) and the proposal to remove the derogation from the requirement for participants in the auction to hold Transmission Entry Capacity (TEC) before prequalification for the next T-1 auction.

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