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On Friday evening, the electricity units bidding into the UK capacity market were published.

Highlights are:

  • Four new CCGT’s (Combined Cycle Gas Turbine power plants) have qualified in this auction on the sites of Kings Lynn, Drakelow, Killingholme and Trafford, with a capacity of 3.6GW. In total, there are 12 CCGT’s with an incredible 13GW of potential capacity that have qualified in this auction. Building baseload gas power plants with a lifetime of around 30 years risk putting at risk the UK’s future climate targets.
  • The auction will likely take coal contracts cumulatively to over £500m, despite the UK government commitment to phasing-out coal by 2025, with a potential “last hurrah” of up to £200m in payment.

 

Who has qualified for the Four Year-ahead auction for Oct-2021 to Sep-2022?

  • New CCGT: Four new CCGT’s have qualified. There are now 12 CCGT’s with an incredible 13GW of potential capacity that qualified. New up EPH’s purchase of King’s Lynn B site from Centrica, CLDN building a Killingholme expansion, Powersite building on the old Drakelow site, and the return of Trafford Power by Carlton Power.  There are even more in the pipeline: a further 2 projects that are seeking planning and will increase this further in the future: Eggborough’s audacious plan for a 2.5GW CCGT, and Drax’s plan to repower two coal units to gas. Three other sites have planning and might opt to build in the future: EDF’s Sutton Bridge, SSE’s Abernedd and SSE’s Seabank.

 

  • New OCGT: The amount of Open Cycle Gas Turbine power plants bidding into the Capacity Market has almost doubled, led by a huge increase in small embedded generators bidding,despite the near-abolition of embedded benefits. In total, there are 360 projects qualified that are between 2-50MW, cumulatively adding to 5.3GW.  The biggest company bidding is “UK Flexible Reserve Limited”, with 644MW of projects qualified.  It is not known how changes to embedded benefits will impact the seriousness of these OCGT projects.

 

  • COAL: All the 6GW of coal plants that got capacity contracts to September 2021 have qualified. On top of this, Cottam is still bidding despite not getting a contract last time, and the same for units at West Burton, Drax and Fiddlers. So, a lot of coal. Eggborough, however is not bidding once again.
  • Here is a reminder of what’s been previously awarded to coal plants:
  • So far, these coal capacity contracts will pay £453m to coal plants, despite the government commitment to phase-out coal.

 

  • Diesel: virtually eliminated. There is only 80MW that bid.
  • Battery: 4.8GW of new battery has qualified. It is not known how the changes to de-rating of batteries will impact this.

 

Here is all categories that qualified in the auction:

The results of the 2016 auction saw the proxy closure of Cottam coal power plant, 500MW of battery committed to build, and a slew of peaking gas plants committed to be built.

 

Year-ahead auction for Oct-2018 to Sep-2019

Also announced was who will bid for the year-ahead auction for Oct-2018 to Sep-2019.  Although there was already a four-year-ahead auction, there is still a quite a lot of capacity – about 7GW – left to procure (see graphic below).  This is because of the hole left by Longannet closing, Trafford CCGT defaulting, as well as some volume already saved for T-1, and the total capacity to procure has been raised.

There is sufficient capacity left to bid in this.  All the remaining 3GW of uncontracted coal is bidding in (Eggborough, and units at Fiddler’s, Drax and West Burton), as is existing gas that was uncontracted (the biggest are Peterhead, Carrington, Corby, Barry, Killingholme).  There is also over 2GW each of demand-side response, battery and OCGT.