The Department of Business, Energy and Industrial Strategy (BEIS) is consulting in the inclusion of electric vehicles (EVs) in the Capacity Market (CM).
In an open letter to stakeholders, the department announced that it is engaging with National Grid ESO to determine whether the technology could contribute to securing supply.
The suggestion formed part of BEIS’s response to stakeholder engagement on whether new generating technologies – that do not fit within the Generating Technology Class (GTC) – should be able to participate in future CM auctions, which was posited in September.
This looked predominantly at the possibility of tidal and geothermal, finding that both do not appear to be commercially viable without financial support from the government, and as such it will be “some time” before they are ready to enter the CM.
As such, BEIS has raised the need for de-rating factors for the two technologies with the ESO, this would allow them to access the CM as soon as they are economically ready, but also allows the government to accurately account for their potential contribution in auction targets paving the way for the technologies.
BEIS suggested that the technology assumptions set out by National Grid ESO in its Future Energy Scenarios for tidal and geothermal could form the basis of developing de-rating factors, as well as helping to provide interim de-rating factors should any projects come forwards sooner than predicted.
Other technologies examined as part of the stakeholder consultation included compressed air storage, offshore storage and electrolysers and fuel cells, all of which can be entered into the CM as storage. Additionally hydrogen-fired generation and carbon capture, utilisation, and storage systems can be entered under the relevant generation type, BEIS determined following the consultation.
The department received responses from 14 stakeholders to the initial consultation, including trade associations, developers, and technical experts. Some raised comments about hybrid CMUs, however there is still a lack of consensus as to what is needed to allow them to participate in the CM auctions, and as such won’t be moving forwards at the moment.
Other aspects brought up included rewarding flexibility, however that is no an objective of the CM and as such changes would not be appropriate. And de-rating improvements for solar, offshore wind and energy from waste, with this suggestion passed on to the ESO for consideration.
The move to broaden access to the CM auctions follows a number of capacity concerns in recent months, with National Grid ESO warning of tight markets just last week, as low winds and falling temperatures caused power prices to soar to more than £300/MWh.
This followed the ESO putting out an Electricity Margin Notice on 4 November as it predicted a shortfall of 477MW, and issuing a Capacity Market notice warning in September after the margin had dropped below its 500MW threshold.