Ofgem’s ninth report on the operation of the capacity market (CM), covering the period between 1 October 2023 and 30 September 2024, shows the 2023/24 T-4 auction received 810 prequalification applications.
Ofgem has said that “more thought” is needed on how demand-side response (DSR) units can incorporate limited duration technologies, such as storage, when bidding for Capacity Market contracts.
Demand side response in the Irish Capacity Remuneration Mechanism (CRM) is to face de-rating factors already applied to storage duration limits under new rules confirmed by the country’s electricity market authority.
Scottish Power has come under scrutiny from the demand side response (DSR) sector after proposing to Ofgem that de-rating factors applied to large scale battery storage should be extended to those used to provide DSR in the Capacity Market.
The capacity market is rapidly becoming “outdated” after the latest auction failed to secure capacity and value for new technologies like energy storage, which is now in “a state of flux” following changes to de-rating factors.
The vast majority of battery projects set to compete in the upcoming Capacity Market (CM) auctions will face significantly decreased de-rating factors after it emerged that most projects are still set to use either 30 minute or one hour duration batteries.
Changes to the de-rating factors for battery storage projects competing in the Capacity Market (CM) will push the sector towards longer-duration batteries, while potentially sparking a shift towards energy arbitrage as a source of revenue for shorter duration applications.
UK renewables and battery developer Anesco has warned that the looming de-rating of battery storage in the Capacity Market risks scaring investors away from the technology.
