The first Capacity Market auction, which started at 09:00 today, is the next stage in the Government’s plan to ensure the lights stay on at the least cost – both now and in the future.
The aim of the Capacity Market is to make sure that there is enough capacity available to meet peak electricity demand in the future. The first stage of this process has been to estimate how much capacity will be needed in 2018/19, which is the first year the Capacity Market will be running. Electricity providers will then bid into this capacity auction, promising if they win a contract that they will be available to provide electricity when needed. In return, they receive a steady payment on top of the electricity that they sell.
National Grid is responsible for running today’s auction and is allocating 48.6GW of capacity. There has been a very high level of interest from large and small generators. Both established and emerging players in the market are bidding, representing over 64GW of capacity. This ensures that it will be a very competitive process and will help to keep costs down for bill payers.
Press release; Image: pixabay