Capacity Market auction results: February 2018 | KPMG | UK

Capacity Market auction results: February 2018

Capacity Market auction results: February 2018

Record low clearing price reflects limited need for new capacity.

1000

Partner and Head of Power and Utilities

KPMG in the UK

Contact

Also on KPMG.com

Capacity Market auction results: January 2018 - light bulb from black wire on grey background

The latest T-4 Capacity Market (CM) auction cleared at a record low price of £8.40/kW. Our analysis explains the potential implications for the energy sector.

Headline results

  • This year’s auction means a big shift away from coal, with nearly 8GW of existing coal stations missing out on agreements. 
  • Existing gas and nuclear, plus new interconnectors and decentralised energy are filling the gap, as we transition to a power system that is both more localised and more international, with decreasing dependence on large-scale power generation.
  • Biggest challenge for security of supply in GB market is now about providing flexibility rather than the overall level of capacity.
  • Low clearing price will make it harder to progress case for new large-scale gas-fired capacity until the electrification of transport increases the overall demand for electricity. 
  • The January 2018 T-1 auction cleared at £6/kW, securing 5.8GW of capacity, with the total cost of CM ~£1b for 2018/19.

Download the full report now to learn more.
 

Connect with us

 

Request for proposal

 

Submit