The Government has published the parameters for the next Capacity Market auction to ensure the UK has sufficient capacity to meet electricity demand for 2019-20.
The parameters outline the criteria for energy suppliers to apply and partake in the Government’s second capacity market auction, expected to take place in December 2015.
For the first time, this year interconnectors are eligible to participate, increasing the competitive pressure on the auction clearing price and helping to ensure that security of supply is delivered at least cost to consumers.
This makes it more likely that Scotland will have to import energy in bad winter weather conditions – when electricity generated from wind turbines can dive to zero – from England.
Parameters for the Transitional Arrangements auction, for delivery of capacity in 2016-17, to encourage the growth of the Demand Side Response sector are also published.
Junior UK Energy Minister Andrea Leadsom said: “We have a plan to power the country so that British people and businesses can be confident that the lights will stay on, not just this winter but in the years and decades ahead, at the lowest possible cost to the hardworking people paying the bills.
“We’re building a new generation of clean, secure and affordable energy supplies, and are doing all that we can to help innovative technology to thrive.”
Using the tools provided by Government, National Grid has already announced the early procurement of additional reserve for this coming winter. This prudent step to ensure electricity supplies remain comfortable throughout winter ensured that bill payers benefited, with energy costing much less than last winter.
The Government also published a Command Paper in response to the House of Lords Science and Technology Select Committee report into the resilience of the UK electricity system.
The report endorsed the Government’s decision to play a greater role in managing the electricity system through Electricity Market Reform, and concluded that the additional tools given to National Grid to procure reserve capacity ahead of the capacity market will ensure continued security of supply.
The Scottish Government declined to provide a comment on these new parameters.