The T-4 2019 Capacity Market (CM) auction for delivery in year 2023/24 (T-4 auction) concluded on 6 March 2020.

In this bulletin, we provide our reflections in collaboration with LCP on the auction results. We also draw comparisons to the T-3 auction for delivery in 2022/23 (T-3 auction) that was held in 2020 just over a month earlier following a one year delay.

Headlines are:

• The auction cleared at a price of £15.97 per kW per year, significantly above the clearing price of £6.44 per kW in the T-3 auction and the £8.40 per kW cleared in the T-4 auction for delivery year 2021/22 held in 2018 (previous T-4 auction).
• 43.7 GW of aggregate de-rated capacity was procured in this auction. The target capacity for the two auctions held in 2020 was quite a bit lower compared to the capacity auctions held in previous years.
• Consistent with the T-3 auction, a limited amount of coal capacity cleared (comprising only of units from Uniper’s Ratcliffe plant).
• Unlike previous auctions, several existing nuclear plant either opted out (861 MW Hinkley Point B) or failed to clear (996 MW of Hartlepool and 952 MW of Heysham 1).
• The three “new build” interconnectors clearing in the auction – ElecLink, IFA2, and North Sea Link – had cleared in previous auctions. All interconnection capacity participating in this auction was more heavily de-rated than in any previous auction.
• 1.8 GW of new-build capacity cleared in the auction. Nearly half of this was SSE’s 804 MW Keadby 2 CCGT, which failed to clear in the previous T-4 auction held in 2018 but to which SSE had committed nonetheless.
• Compared to the T-3 auction when 15 MW onshore wind cleared in the CM auction for the first time, a smaller volume (10 MW of de-rated capacity across three units, which equates to 142MW of installed capacity) of onshore wind cleared.
• 1.2 GW of Demand Side Response (DSR) cleared in this auction, a similar volume to that seen in previous T-4 auctions but well above the 0.5 GW cleared in the T-3 auction.
• 1.5 GW of prequalified refurbishing capacity accepted 1 year contracts. The 495 MW Baglan Bay CCGT failed to clear as a refurbished unit.