National Grid ESO should procure 300MW of generation capacity in a ‘T-1′ Capacity Market auction for delivery in the winter of 2020/21, BEIS has said, although capacity estimates say it is not required.

BEIS has been more cautious than the 2019 Electricity Capacity Report (ECR) recommended at the end of May. The ECR said that no additional capacity shoud be added to the plants that have already secured a CM contract in the T-4 auction for 2020/21.

Explaining why it was going ahead with procurement BEIS said the government had committed, as part of its State aid notification, to set targets forT-1 auctions at a level of at least half the original set-aside (600MW in this case). In addition, it said, there were additional non-delivery risks to be considered. One reason was the difficulties created for capacity providers by the EU’s withdrawal of State Aid approval and the consequent suspension of the Capacity Market and payments, Secindly there were ”uncertainties created by recent plant outages”.  These justify a departure from the ECR recommendation to a 300MW target, half of the T-1 set-aside, BEIS said.

Prices in the Capacity Market auction have been successively lower and the most recent T-1 auction, for 2019/20, cleared at just 77p/kW.