The first year of capacity market has started. What does this mean for UK power supply?

This winter will be the first winter that promises the delivery of power through the Capacity Market (CM) scheme. The scheme which currently sits under the Electricity Market Reform (EMR) aims to increase UK power generation and capacity during peak hours and periods of system stress. Initially the CM scheme was to be introduced in October 2018, however due to tight supply over last winter (winter 16/17), the Government brought the delivery date forward by 1 year.

Last winter, French nuclear power was severely reduced due to process problems at several nuclear power stations. As France relies on nuclear power to generate 80% of their power supply, the closure of multiple power stations had a drastic effect on both European and UK power prices. To avoid seeing prices rocket once again, the contracts award for additional capacity to provide system support during unpredictable supply periods. Renewable generators can be intermittent and unreliable. They do not provide the UK with a base power supply. Additional capacity generators that are able to switch on and off at rapid response times should be able to fill any gap created by lack of renewables, or fill an increased gap between supply and demand.

National Grid’s Winter Outlook published this year forecasts the surplus power margin to be around 6.2GW due to the increased capacity. National Grid anticipate that there will be:

Sufficient generation and interconnector imports to meet demand.
— National Grid, Winter 17/18 Outlook

It’s worthwhile mentioning here that all 4 power interconnectors in the UK have been awarded Capacity Market contracts. If we have a repeat of last winter, it could be interesting to see how the IFA interconnector between the UK and France operates, and whether exports will be taken into consideration.

Alternatively, most other CM contracts were awarded to pre-existing CCGT generations, and coal power stations. Awards to new generators have not been popular this time round due to time constraints created by bringing the CM date forward by 1 year.




Sources: Energy Live News, Reuters, National Grid.