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Chart of the Week

2020

Out with the old? Capacity Market Prequalification

Lee Drummee Analyst

On 11 December 2020, the EMR Delivery Body (National Grid ESO) published the prequalification registers for the T-1 (2021-22) and T-4 (2024-25) Capacity Market (CM) auctions. In this 'Chart of the week', we explore the prequalification picture for the T-4 auction and what this could mean in terms of pricing outcomes ahead of auctions next March. The headline figure from the prequalification register is that 54.0GW of de-rated capacity has prequalified for the T-4 auction against a procurement target of 41.2GW. However, this figure – and the 12.8GW surplus between prequalified and target capacity – does not tell the whole story. Overall, 38.0GW of prequalified de-rated capacity is from Existing Generating CMUs and Existing Interconnector CMUs, leaving a 3.2GW deficit between the target and existing capacity. This existing capacity includes 20.5GW of CCGT, 3.6GW of nuclear and 2.0GW of OCGT. “Despite the opting out of large amounts of existing capacity, new build generation will still need to be highly competitive to win agreements, with a number of new interconnectors filling the deficit between the remaining existing generation and the procurment target” Notably, this is the first ever CM auction in which existing generation capacity does not exceed the procurement capacity, with a number of large plant opting out of the auction. 3.8GW of nuclear capacity has opted out with Hinkley Point B, Hartlepool, Hunterston B and Heysham 1 all expected to be decommissioned by the start of the Delivery Year. A further 2.0GW of CCGT capacity from Sutton Bridge, Baglan Bay ...

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