Post: T-1 Capacity Auction Clears at Low Price

T-1 Capacity Auction Clears at Low Price

MICHAEL PHELAN, CEO AT ENDECO TECHNOLOGIES (SOON TO CHANGE NAME TO GRIDBEYOND) COMMENTED ON THE RECENT CAPACITY AUCTION RESULT.

“The low clearing price of the T-1 capacity auction suggests that there are adequate levels of system margin – or capacity – available to deliver the electricity that the country will need for next winter. In the short term, the significance of this auction result is that we can expect a stable system over the peak months, and energy consumers can look forward to lower bills than had the auction cleared at a higher price. Looking further out, next week’s T-4 auction will give a clearer picture about market conditions in future years.”

“We’re hearing questions around the restrictions placed on the use of diesel plants in the capacity market, and why this didn’t impact the T-1 auction result. We believe that the repercussions of this will be more accurately reflected in the upcoming T-4 auction. The T-1 is designed as a ‘top-up’ auction to refine the delivery of capacity provided by previous T-4 auctions. The longer-term impact on diesel generation should become clearer in next week’s T-4 auction.”

“Those participating in the capacity market through demand side response (DSR) may feel uncertain about this T-1 closing value. The key to ensuring that they continue to benefit financially from participating in grid balancing will be to look for revenue stacking opportunities. To optimise income from DSR today you need technology; an optimised energy demand technology platform, with the ability to participate in the dynamic FR schemes offered by National Grid. Endeco offers this technology, as well as peace of mind, to industrial and commercial businesses that want a future-proof way to optimise income from the capacity market.”

For more information on how the capacity market works, download our guide.