Cornwall Insight comments on the T-1 Capacity Market auction’s joint-highest clearing price

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This joint highest clearing price for a CM auction followed the procurement target being uplifted by 2GW in light of known non-delivery for some units and risks of other large-scale units not being operational next winter.

Commenting on the T-1 Capacity Market (CM) auction (Delivery Year 2021-22) clearing in Round 6 with a clearing price of £45/kW, the joint highest ever clearing price of a CM auction, Tim Dixon Wholesale Team Lead at Cornwall Insight, said:

“This joint highest clearing price for a CM auction followed the procurement target being uplifted by 2GW in light of known non-delivery for some units and risks of other large-scale units not being operational next winter.

“One such driver of the higher procurement target came from two Combined Cycle Gas Turbine (CCGT) power stations (Severn Power and Sutton Bridge) which unexpectedly entered into a “dormant” state in summer 2020 when its owner Calon Energy went into administration. Meanwhile, several prolonged outages have been observed at several nuclear plant.

“With a tighter auction, our forecast noted a high clearing price would happen should certain plant, particularly coal, be able to exit the auction early. The provisional results showed this to be true, with EDF’s West Burton A coal units failing to secure agreements, with the company saying it will now consider all options for the station.

“To help fill the gap that some of these coal units left, several new-build solar, onshore wind, gas, battery storage and waste sites secured agreements, in addition to plenty of exiting capacity.”

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