The latest T-1 Capacity Market (CM) auction has cleared at £1.00/kW/y, with just two storage assets winning contracts, prompting renewed questions over the benefits of running such auctions.
The auction, which concluded last week, procured 1024.409MW of capacity for the 2020/21 period from 33 CMUs.
The clearing price is above that of the record-low seen in June 2019, with that auction clearing at just £0.77/kW. However, it is still significantly lower than the £6/kW/y of the T-1 auction for 2018/19.
The auction was oversubscribed which, according to Cornwall Insight’s head of training, Ed Reed, saw extra competition put “downward pressure on prices”.
“Almost all the capacity was already operational, which indicates that an existing plant is willing to take low prices as an additional revenue stream rather than nothing at all.
“With such a low price, it raises the question of whether running these T-1 auctions for relatively low capacity is beneficial,” Reed added.
The provisional results show that battery storage totaled around 0.36% of successful contracts, with open-cycle gas turbines (OCGT) taking home 8.27% (89.279MW) of the capacity, down on the 22% the technology secured in June.
The largest contract was awarded to the NEMO interconnector (820MW) between Kent and Belgium, making up 80.05% of the successful contracts.
Of the 1024.409MW awarded, 3.678MW comes from battery storage assets. Just two storage projects secured contracts in the auction – Foresight’s 10MW Nevendon battery, at its derated capacity of 1.226MW, and an asset owned by UK Energy Storage Services with a derated capacity of 2.452MW.
Both are existing generators, with no new-build battery storage assets awarded contracts. In June’s auction, only one new-build asset was awarded a contract – the 49.99MW Roosecote battery owned by Centrica, at it derated capacity of 8.733MW.
DSR saw a higher share of contracts than storage in the latest T-1 auction, with Anesco dominating the asset class, securing 65.554MW across six assets. This was followed by Rock Energy Storage (16.438MW) and lastly Veolia (2MW).
The DSR contracts awarded were split between proven and unproven, with Anesco’s unproven and Rock Energy Storage and Veolia proven.
Battery storage has suffered in recent CM auctions following the application of de-rating factors of up to 80% from 2018. However, in the latest T-3 auction, results of which were published last week, Anesco and Eelpower seem to have sidestepped the derating factors by listing as DSR assets.
The T-3 auction cleared at £6.44/kW/y, awarding agreements to 45,058.832MW of capacity.
The results of last week’s T-1 auction are provisional until given full clearance on 19 February 2020.
