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National Grid cleared to run postponed Capacity Market auction ‘as soon as reasonably practicable’

Image: Getty.

Image: Getty.

National Grid has been instructed to hold the postponed T-1 Capacity Market auction “as soon as reasonably practicable”.

The instruction came in a letter to the electricity system operator’s director of operations Duncan Burt from energy secretary Greg Clark, addressed on Wednesday 10 April, and followed the Electricity Capacity (No. 1) Regulations 2019 Statutory Instrument’s successful passage through parliament.

The T-1 auction, which will procure top-up capacity for the 2019/20 winter period, was originally scheduled to take place in January this year but was postponed indefinitely after the Capacity Market was effectively suspended following a landmark ruling at the European Court of Justice.

That ruling originated from a challenge by distributed energy firm Tempus Energy on the basis that the European Commission erred in granting the scheme State Aid approval without a full and proper investigation.

But while the scheme is suspended and an EC investigation underway, the government has sought to push ahead and continue its operation, albeit in a roundabout fashion. As it stands, and until the EC’s investigation returns a verdict, all payments under the proposed top-up auction would be pending approval.

At the start of last month the Department for Business, Energy and Industrial Strategy (BEIS) confirmed that it wanted a top-up auction to be ran “as soon as possible”, but doing so would require approval from both Houses of Parliament, a fact which BEIS took into account when extending the auction window until the end of August as a “contingency measure”.

Meanwhile, Clark’s letter also instructs the scheme’s delivery body to allow prequalified CMUs – the qualification process for the T-1 auction was concluded in January despite the scheme’s suspension – to withdraw from the auction without penalty.

Finally, the letter states that the government’s action takes effect from today (12 April 2019), allowing the ESO to inform its stakeholders before the withdrawal process can begin.

Companies with CMUs registered for the auction will now face a wait to see when the auction is to take place.

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