The UK government has confirmed changes to the Capacity Market which are designed to remove barriers for demand side response (DSR) and energy storage, making it easier for clean technologies to compete in auctions.
The changes include reducing the Minimum Capacity Threshold from 2MW to 1MW. DSR will now be able to apply to prequalify to bid for all the agreement lengths in the capacity market, provided they can demonstrate the relevant CAPEX threshold.
It will now provide legislative underpinning for the long-standing 50% set-aside commitment for T1 auctions, along with methodology for working out the minimum amount of set-aside. T1 auctions are set up to guarantee capacity is available to the system to keep Britain’s lights on the following winter, whereas the other type, T4 auctions, look to secure adequate capacity four years ahead.
A formal, annual review of new capacity technologies that are not currently competing in the Capacity Market but which could help to provide security will be brought in.
Reporting and verification for the introduction of CO2 emission limits will also be brought in, with emissions limits set to apply to capacity which existed before 4 July 2019 from 1 October 2024. Britain’s European neighbour France recently introduced its first ever Capacity Market auction with a low emissions requirement, awarding contracts to more than 250MW of energy storage assets as a consequence.
Changes help clear the path forwards for clean technologies, association chief says
“A common barrier to advancing the UK’s energy storage sector is that our electricity grids and major energy policies from government are set up for an age of large-scale, centralised fossil power stations,” explained Dr Nina Skorupska CBE, chief executive of the UK’s national Renewable Energy Association (REA).
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