Record low clearing prices in the UK’s recently-held T-1 Capacity Market auction have rendered the mechanism unfit for purpose, while meeting its minimum requirements could seem “fatally onerous” for battery storage developers, voices around the energy industry have said.
Last week the T-1 auction concluded, clearing at a record low price of just £0.77/kW. Those economics made it significantly challenging for new generators to compete, and just one new-build battery storage project – Centrica’s 49.99MW Roosecote project – was successful in obtaining a contract.
Quentin Scrimshire, head of energy storage at Kiwi Power, said the latest prices didn’t achieve the mechanism’s purpose, and instead only served to reward larger generators that would already be generating throughout the winter.
“The whole mind-set around the Capacity Market has changed from being a mechanism that would drive investment to just a handout from the government on top of your standard operational case,” Scrimshire said.
It’s not the first time that questions have been asked about the Capacity Market and its ability to meet its objectives. When the T-4 clearing price dropped to £6/kW last year, triggering large quantities of new capacity to exit the auction, industry professionals labelled the mechanism “outdated” and decried de-rating factors which had left it in a “state of flux”.
Low prices a disappointment for clean energy technologies
While the T-1 is indeed a top-up auction – Tom Edwards, senior modeller at Cornwall Insight, said it was ultimately “neither here nor there” for generating plant – the low prices have still been disappointing for clean technologies hoping to compete against dirtier counterparts.
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