The T-4 Capacity Market auctioned closed yesterday in its twelfth round, with 40819.895MW awarded agreements.
It cleared at £18//kW/year, a small jump from last year’s T-4 auction which cleared at £15.97/kW/year.
In total, 491 Capacity Market Units were awarded contracts, with gas continuing to dominate. It accounted for 44.81% of the CMUs, with 220 units contracted to provide capacity in 2024/25.
This was followed by demand side response (DSR), which represented 27.7% or 136 of the contracts, and then battery storage (6.52% or 32) and hydro (6.11% or 30). Significantly, this was the first year that coal could not compete, as all assets are set to be decommissioned ahead of the government’s 2024 ban.
There was, however, a jump in the amount of gas assets accepted from last year, with CCGTs picking up 41.92% or 18,341.537MW last year, compared with 26,446.447MW in this weeks auction.
Speaking to Current±, EnAppSys director Paul Verrill said: “The biggest surprise really is that the new open cycle gas turbine plants (OCGTs) owned by Drax have taken a contract i.e. Hirwuan, Millbrook and Progress Power, 285MW OCGTs. So they're very suited to peaking but are not the most efficient of assets."
“They were by Stag Energy and sold to Drax. And it was kind of interesting that Drax didn't sell them when they sold all of their assets to Vitol. Drax retained them and obviously they're the top three contracts so that's probably quite surprising.”
Batteries continued to grow their share of the market, winning 251.98MW of capacity, more than double the 117.0237MW awarded in last year’s auction. This included the likes of Pivot Power, Anesco, npower, Thrive Renewables, Gigabox and Gridserve being awarded contracts.
Louis Burford, head of solution sales & optimisation at Centrica Business Solutions, said: “It was good to see an increased number of battery and flexibility providers clearing the T-4 auction. The make-up of firms taking part, and in particular the reduction in coal, is a signal that the UK’s energy system is moving towards a more sustainable future.”
Although the capacity of battery storage grew, according to EnAppSys batteries' success rate was lower than many other technologies, with just 32% of those entering coming out with contracts as opposed to onshore wind at 89% or solar PV at 93%. Verrill pointed to the current lack of depth in the market, and that the Capacity Market “isn't a particular driver of value for them.”
Overall, 51981.694MW of capacity entered the auction, with 78.53% awarded an agreement.
Just six onshore wind assets were accepted, representing 1.22% of awarded capacity, and two solar assets representing 0.41%.
All the interconnectors that took part in the auction were awarded contracts, with 6874.2MW from nine assets accepted.
The vast majority of the assets awarded contracts were existing generating Capacity Market Units, with 30,468.563MW procured from 262 assets. Unproven DSR was the second biggest segment, with 121 – the bulk of which came from Enel X – awarded contracts, with a capacity of 972.908MW.
This week's T-4 auction follows the T-1 auction last week, which saw prices reach a record high of £45/kW/year due to tighter generation.