BEIS steps back from requiring Capacity Market units to join BM in 2022 – but says it remains ‘preferred option’ to raise visibility

The government has stepped back from a plan to require all participants in the Capacity Market to also register as participants in the Balancing Market (BM).
Publishing the outcome of a consultation on this and other changes to the Capacity Market – most of which were seen as positive – the Department for Business, Energy and Industrial Strategy (BEIS) said that it still viewed data submission to NGESO through existing BM avenues to be its “preferred option” for providing visibility of the market. It considering alternative proposals such as using historic half-hourly metered data to assume availability of units, or providing a separate data feed of availability to NGESO.
BEIS said a small majority of respondents disagreed with the proposals. Some had concerns around the cost of joining the BM and complying with requirements. Some argued that the purposes of the two mechanisms were not aligned – the BM pays for energy, whereas the CM is intended to pay for capacity.
Respondents also said there are barriers to BM entry that should be addressed and that the BM may not be suitable for certain units, such as smaller embedded units, demand side response and combined heat and power.
Most respondents thought that the proposed implementation timeframe, which would have applied from 2022 prequalification (from Delivery Year 2023/24 for those successful in the 2023 T-1 auction) was too short.
But BEIS insisted that a significant portion of respondents supported the proposal, “acknowledging the increased visibility that this would offer to NGESO and the wider market, and the benefits that such a change would provide”. It says it would have benefits within the CM and to the wider system and market, including transmission charging; forecasting electricity margins and prompting wholesale power prices that reflect market and system conditions.
BEIS now proposes to establish a work plan with NGESO, Elexon and Ofgem to explore solutions to the issues raised and fully assess the impacts of a change on the CM. It remains focused on bringing CM units into the BM, although it conceded that “if we identify and justify in our continued engagement a subset of CMUs that cannot participate in the BM, we will look to develop more suitable processes and methods for data sharing that would be suitable for us, NGESO and CMUs”
Read the full outcome here

Further reading
Distributed generation forced to provide Balancing Market data to join Capacity Market in future – respond to consultation

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