Energy minister Kwasi Kwarteng has reduced again the target for procuring electricity generating capacity in the upcoming Capacity Market auction.
The target capacity for the T-4 auction for delivery in 2023/24 is 43.1GW, 200MW below the target expected just a few weeks ago at the time of the T-3 auction for 2022/23, and significantly lower than procurement in that auction, which had a target capacity of 44GW. The T-3 auction closed at £6.44/kW, the lowest level yet for long-term procurement.
The auction maintains a downward trend for procurement (see previous story). It is likely to also continue to see large amounts of capacity chasing the shrinking requirement, as renewables coming out of other subsidy regimes are permitted to compete, albeit at heavy derating factors.
The recent year-ahead auction has been closing still lower and some have questioned whether it has any value. The recent auction saw 3GW of capacity chase just 300MW of available contracts. When it closed at £1/kW the EMR Delivery body took over a GW of derated capacity with the Nemo interconnector the largest single asset. The previous T-1 auction closed still lower, at 77p/kW.