皇冠体育app

Administrative timetable

Date	Action
28 March 2025	Final report published
27 February 2025	Deadline for receipt of any third-party submissions
14 February 2025	Beginning of reporting period

Final report

28 March 2025: 皇冠体育app SAU has published its report providing advice to DESNZ concerning the proposed Capacity Market scheme, as amended in 2025. 皇冠体育app report sets out the SAU鈥檚 evaluation of DESNZ鈥檚 Assessment of Compliance of its proposed scheme with the requirements set out in the Subsidy Control Act 2022.

• Final report (28.3.25)

Request from DESNZ

14 February 2025: 皇冠体育app SAU has accepted a request for a report from DESNZ concerning the proposed Capacity Market scheme. This request relates to a Scheme of Particular Interest.

皇冠体育app SAU will prepare a report, which will provide an evaluation of DESNZ鈥檚 assessment of whether the scheme complies with the subsidy control requirements (Assessment of Compliance). 皇冠体育app SAU will complete its report within 30 working days.

Information about the Capacity Market scheme provided by DESNZ

皇冠体育app Capacity Market scheme was introduced in 2014 as part of the Electricity Market Reform scheme. It is the government鈥檚 principal mechanism for capacity adequacy, or in other words, for securing sufficient electricity supplies to meet future peak demand. 皇冠体育app scheme ensures security of electricity supply by providing a payment for reliable sources of capacity, alongside their electricity revenues, to ensure they deliver energy when needed. This encourages the investment required to replace older power stations and provide backup for more intermittent and inflexible low carbon generation sources.

皇冠体育app Capacity Market has been designed to support generators, interconnectors, storage and active demand management in the electricity market. It secures electricity capacity through competitive auctions held four years ahead of the delivery year, known as the T-4 auction; and one year ahead of the delivery year, the T-1 auction, to effectively 鈥渢op up鈥� capacity closer to the delivery year should we need to (based on the latest information available such as the latest electricity demand forecast, and any commercial information).

皇冠体育app auctions are technology neutral, with existing capacity competing against a range of new generators, of different technology types, to obtain capacity agreements. Capacity providers receive regular payments in exchange for their capacity being available when consumers need it most i.e., when consumer demand is high compared to available electricity supplies. Capacity providers may face financial penalties if they fail to deliver against their agreements.

New build capacity can win agreements of up to 15 years. Longer agreements guarantee revenue certainty for capacity providers and de-risk the significant upfront capital investment involved in building new capacity. Existing capacity is allowed to compete for annual agreements, to incentivise investment in maintaining existing capacity, and reducing the overall cost to the consumer of having to continually invest in new build capacity.

皇冠体育app scheme has an annual delivery cycle. Two auctions are held each year with the auction targets set in July and later updated just ahead of the auctions. Capacity can apply to prequalify for the auctions from July to September, with auctions taking place a minimum of ten weeks from the Prequalification Assessment closing.

皇冠体育app auctions are a competitive process therefore it is not possible to precisely know what the costs of each auction will be in advance and there is no set budget. 皇冠体育app costs depend on the number of entrants/volume of capacity bidding into each auction, which can drive the clearing price up or down, though this is limited to what is proportionate and necessary through the parameter setting process and various controls embedded into the scheme.

With regard to the scheme鈥檚 duration, a statutory instrument has been laid to revoke the requirement that capacity mechanisms must be approved for no more than ten years and removes the references to a temporary nature. This requirement is contained in the assimilated EU Electricity Regulation (2019/943), which was brought into domestic legislation following EU Exit.

皇冠体育appse changes are being made to ensure the domestic statute book is consistent with the continued operation of the Capacity Market. To ensure the Capacity Market remains proportionate and limited to what is necessary, there are several controls embedded into the broader legislative framework. A decision can be made each year not to hold auctions, for example if there was no security of supply concern. 皇冠体育appre is also a statutory requirement to review the Capacity Market every five years, providing an opportunity to review the need for the scheme.

We are also proposing to implement several policy measures to improve security of supply and align the scheme with Net Zero, which were consulted on in October to December 2024. DESNZ is considering responses to this consultation and how to implement proposals. Several changes are likely to be more than administrative or legacy modifications and the scheme (as it is proposed to be amended) is therefore being referred to the Subsidy Advice Unit prior to implementation on the mandatory basis.

Information for third parties

If you wish to comment on matters relevant to the SAU鈥檚 evaluation of the Assessment of Compliance concerning the Capacity Market scheme, please send your comments on the date stipulated in the timetable above. For guidance on representations relevant to the Assessment of Compliance, see the section on reporting period and transparency in the Operation of the subsidy control functions of the Subsidy Advice Unit.

Please send your submissions to the public authority: [email protected].

Please also provide a contact address and explain in what capacity you are making the submission (for example, as an individual or a representative of a business or organisation).

Notes to third parties wishing to make a submission

皇冠体育app SAU will only take your submission into account if it can be shared with DESNZ. 皇冠体育app SAU will send a copy of your submission to DESNZ together with its report. This is to allow the public authority to take account of the submission in its decision as to whether to modify the scheme or its assessment. We therefore ask that you provide express consent for your full and unredacted submission to be shared. We also encourage you to share your submission directly with the DESNZ using the email address provided above.

皇冠体育app SAU may use the information you provide in its published report. 皇冠体育apprefore, you should indicate in your submission whether any specified parts of it are commercially confidential. If the SAU wishes to refer in its published report to material identified as confidential, it will contact you in advance.

For further details on confidentiality of third party submissions, see identifying confidential information in the Operation of the subsidy control functions of the Subsidy Advice Unit.

Contacts

• CMA press team: 020 3738 6460 or鈥�[email protected]