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Capacity Market auction results: February 2018

Capacity Market auction results: February 2018

Record low clearing price reflects limited need for new capacity.

Simon Virley - Partner and Head of Power and Utilities

Partner and UK Head of Energy & Natural Resources

KPMG in the UK


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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.

Headline results

  • 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.

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