The latest T-4 Capacity Market (CM) auction cleared at a record low price of £8.40/kW. Our analysis explains the potential implications for the energy sector.
- This year’s auction means a big shift away from coal, with nearly 8GW of existing coal stations missing out on agreements.
- Existing gas and nuclear, plus new interconnectors and decentralised energy are filling the gap, as we transition to a power system that is both more localised and more international, with decreasing dependence on large-scale power generation.
- Biggest challenge for security of supply in GB market is now about providing flexibility rather than the overall level of capacity.
- Low clearing price will make it harder to progress case for new large-scale gas-fired capacity until the electrification of transport increases the overall demand for electricity.
- The January 2018 T-1 auction cleared at £6/kW, securing 5.8GW of capacity, with the total cost of CM ~£1b for 2018/19.
Download the full report now to learn more.