Renewables to join Capacity Market

Renewables will be able to participate in the forthcoming Capacity Market (CM) auction for the first time, BEIS has confirmed, subject to derating factors and provided they do not receive other subsidy. BEIS said the addition was “always anticipated” and had been supported by 85% of its consultation respondents. It added, “With the arrival of subsidy-free projects interested in bidding into the CM, and the Delivery Body (“DB”)’s work to effectively de-rate intermittent renewables, the impetus for this change has become clear, reinforced by the widespread support of stakeholders. Given the intention from the inception of the CM to allow renewables to participate, and the arrival of subsidy-free projects sooner than anticipated, we believe that allowing these projects to pre-qualify for the T-3 auction in early 2020 is fair and necessary.”

During the consultation, according to BEIS, most renewable generators indicated that they thought the proposals would not have an impact on their business or on their overall rates of deployment of renewable technologies, as the revenues from the CM would not be significant enough to influence investment decisions. A couple felt that there would be a minimal impact and would result in a very small acceleration of the deployment of subsidy-free renewables. BEIS noted that renewables capacity is currently accounted for in setting auction targets.

Plant with Contract for Difference, Renewables Obligation, or Feed-in Tariff support are excluded but other forms of aid may not count against plant.

BEIS confirmed plans for a T-3 auction in early 2020, with the T-1 auction for 2020/21 to take place 1 week later, and the T-4 auction for 2023/24 to take place six weeks after the T-3 auction. Participants in the T-3 auction will have to pre-qualify: in response to complaints that this would add to companies’ administrative burden the department said that the long period since participants prequalified for the T-1 auction, changes in the CM and the admission of new participants (renewable energy projects) made it necessary. To avoid delaying the start of the auction, BEIS says participants will have to post credit cover within 15 days once the CM process restarts. A 40-day window, as consulted on, could delay the auction, it said.

The department acknowledged shortcomings in the EMR Delivery Body portal.

An indicative auction timeline was recently published by the Delivery Body.

Read the BEIS document

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