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The capacity to beguile

Tom Musker Senior Modeler

Yesterday’s T-4 capacity market auction, for delivery in 2021/22, was beguiling. 50.4GWs was bought at just £8.40/KW (in 2016/17 values), well below the equivalent clearing prices of £18.11/KW and £22.61/KW for the 2019/20 and 2020/21 auctions respectively, and closer to year ahead prices than logic would suggest feasible. The profile of exits shows how sticky the auction was even at very low prices, with “hanging on in there” amongst existing plant clearly a feature between £20-15/KW. The clearing mix shows existing large gas capacity remains remarkably robust in the framework of the capacity market, with 23GWs winning. By contrast, 7GWs of coal stations missed out and may ultimately fall away from future T-4 auctions. It is likely these exited between £20-10/KW, leaving mainly IED compliant coal with an agreement. Batteries were annihilated by the de-rating changes pre-auction, with 151MW out of c1GW ...

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