Last night the EMR delivery body confirmed the final clearing price for the T1 18/19 capacity market auction is £6.00 per KW per year.
While the result of the auction remains provisional for the period of 8 working days, contracts totalling 5.7GW are set to be handed to generators to provide power for next winter.
Figure 1: T-1 Demand and Possible Supply Range
The auction concluded in Bidding Round 14 with 54% of the 10.66GW receiving Capacity Agreements for delivery in 2018/2019.
The capacity market was introduced to incentivise new building capacity and encourage Demand Side Response (DSR) and fundamentally provide supply security. The clearing price was similar to the previous years, which suggests many of those bidding thought of the T1 as a top up to DSR revenues.
For the customer, the auction result will essentially add £30m to the bills next winter, in addition to the £955million already added from the 2014 T4 auction for delivery in 2018/19.