T-1 Capacity Market auction clears at £60/kW/y, with first offshore wind contract and surging storageT-1 Capacity Market auction clears at £60/kW/y, with first offshore wind contract and surging storage

The Capacity Market’s T-1 2023-24 auction has cleared at its second highest price ever, with 5,782.777MW procured at a clearing price of £60/kW/y.

This was split between 269 Capacity Market Units (CMUs) from 144 companies (103 parent companies).

Of the 6,124.249MW of capacity that entered the auction therefore, 94.42% was awarded an agreement.

This included an offshore wind asset for the first time, with SSE’s Seagreen wind farm securing a contract.

SSE securing a contract for 32.05MW of de-rated generation capacity from the offshore wind farm represents a point of maturity for the sector, which due to the dominance of subsidy schemes like Contracts for Difference, has not previously focused on Capacity Market contracts.

It was a strong set of results for battery energy storage assets, with over 600MW of the 1GW that qualified securing contracts.

As with last year, no interconnector capacity was awarded capacity contracts for the 2023-24 period. Gas saw its share fall, although it remains the dominant technology by some margin.

As with last year, no interconnector capacity was awarded capacity contracts for the 2023-24 period. Gas saw its share fall, although it remains the dominant technology by some margin.

The clearing price for the auction was a drop from last year’s record high of £75/kW/y, where all assets cleared in the first round amid concern over tight capacity over the coming year due to the energy crisis.

This beat the previous record set in the T-1 auction for 2021/22 of £45/kW/year. However, prior to this, the role of the auctions had been called into question, following multiple rounds that saw exceptionally low prices.

For example, the T-1 auction for 2020/21 cleared at just £1.00/kW/y, a moderate jump on the record low set in June 2019, when the T-1 auction cleared at just £0.77/kW/y. Both were significantly lower than the £6/kW/y of the T-1 auction for 2018/19.

The T-1 auction results cleared at 11:30 yesterday (14 February), and are currently provisional. The Secretary of State has eight working days to assess the results for 2023/24, and approve or annul them.

Next week (21 February), National Grid ESO’s Electricity Market Reform Delivery Body will run the T-4 Capacity Market auction, procuring capacity for the 2026-27 period. Last year, the T-4 auction cleared at a record high of £30.59/kW/y, due largely to the decommissioning of old assets and higher capacity needs.