15 Feb 2023
Wendel Hortop

Capacity Market 2023: T-1 auction results in five charts

The T-1 Capacity Market Auction for delivery 2023/24 happened on 14th February, with the auction quickly finishing before day two even began. This article gives you all you need to know from the results.

Wendel shares his thoughts on the most important news from the T-1 auction.

If you'd like to re-read our preview for the auction, you can find it here. Or, if you’re entirely new to the Capacity Market, you can watch our Energy Academy video here.

1. Prices clear at £60/kW, the second-highest level ever.

Figure 1: T-1 Capacity Market auction results by year. Source: EMR Delivery Body.

2. Capacity withdrawing before the auction started played the most significant role in the high price outcome.

Figure 2: How prequalified de-rated capacity for the 2023/24 T-1 Capacity Market turned into a successful auction. Source: EMR Delivery Body.

3. Gas plants were the biggest winners from the auction. Low de-rating factors meant only 0.6 GW of de-rated capacity was secured by battery storage.

Figure 3: 2023/24 T-1 Capacity Auction outcomes by technology type. Both de-rated capacity and actual capacity are shown. De-rated capacity is what contracts are secured against. Source: EMR Delivery Body.

4. One-hour duration batteries remained dominant, making up two-thirds of the battery energy storage capacity that won contracts.

Figure 4: 2023/24 T-1 Capacity Auction outcomes for battery storage by duration. The chart shows actual capacity. Source: EMR Delivery Body.

5. In total, 2.5 GW / 3.4 GWh of battery energy storage secured contracts, with Gresham House and Harmony Energy the biggest winners.

Figure 5: 2023/24 T-1 Capacity Auction outcomes for battery storage by system developer/owner. The chart shows actual capacity. Source: EMR Delivery Body.

Final thoughts

  • The nuclear (Hartlepool and Heysham 1) and coal (Ratcliffe-upon-Soar) power stations in the T-1 Capacity Market auction all secured contracts, meaning they will remain operational for another year. The three plants, totaling 2.3 GW of actual capacity, will retire in 2024.
  • These plants had been expected to play a significant role in setting the price, but non-traditional technologies were instead the price setters. Battery storage and demand side response (DSR) comprised most of the 341 MW of capacity that exited during the auction.
  • But a bigger story happened before the auction even began. The withdrawal of 685 MW of prequalified capacity (mostly DSR, battery storage, and gas peakers) ahead of the auction was likely due to uncertainty over whether new projects could be delivered.
  • These withdrawals meant prices cleared at the top end of many estimates before the auction and at the second-highest level ever.
  • Over 2.5 GW of battery energy storage won contracts, exceeding the current operational fleet (although a few of those systems are already online). This points to the enormous growth expected in the battery sector this year - keep an eye out for our annual pipeline update coming next month.

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