The Early Capacity Market auction, securing electricity to be delivered next winter, cleared at £6.95/kW on 3 December, significantly lower than expectations.
The Capacity Market is intended to ensure that sufficient reliable capacity is available by giving payments to encourage investment in new capacity or for existing capacity to remain open.
Around 54.4GW of capacity was procured, roughly 1.9GW of which was new build. In terms of technologies, just over 22GW of large gas-fired capacity was given contracts––accounting for 40% of the successful capacity overall––followed by around 10GW of coal, and nearly 8GW of nuclear power.
Energy minister Jesse Norman said: “Reliable power supplies are essential for businesses to thrive and succeed. Thanks to this auction, homes and businesses can have confidence in the availability of that electricity at the lowest possible cost.”