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Swing low: T-3 Capacity Market auction

Lee Drummee Analyst

On Friday 31 January, the EMR Delivery Body (National Grid ESO) published the provisional results of the T-3 Capacity Market (CM) auction for Delivery Year 2022-23. The clearing price was £6.44/kW/year, the lowest ever in a multi-year (T-4 or T-3) CM auction. The auction procured 45,058.8MW of de-rated capacity. The vast majority of successful capacity came from existing generation, which accounted for 36.9GW or 81.9% of total capacity. The high percentage of successful existing capacity indicates that existing plant are willing to take low prices as an additional revenue stream rather than nothing at all. Interconnectors represented a further 5.9GW of successful de-rated capacity, with 2.8GW of this awarded to new build interconnection. The conditions for new build interconnectors are more favourable than other new build generation. This is due to the Cap and Floor regime and other EU directives insulating them from network charges, allowing them to compete against generation and demand reduction. This is something that should change in the future if and when foreign capacity is able to participate in CM auctions. The auction also awarded agreements to 38 New Build Generating CMUs with a total nameplate capacity of 609.9MW. Once de-rated this figure falls to 319.3MW. That this capacity included new build renewables was the other main talking point from the auction, with onshore wind projects able to participate outside of renewable specific subsidy schemes for the first time. These projects were perhaps more successful than anticipated with five of the seven to take part in the ...

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