All UK coal plants qualify for 2021-22 electricity capacity auction, gas plant misses out

01 December 2017 18:09 Source:ICIS

All of the UK’s major coal-fired power plants have prequalified for the country’s electricity capacity auction for delivery in 2021-22, results released late on Friday by system operator National Grid showed.

This indicates that not one of the successful plants, totalling a combined 10.3GW of capacity, is likely to close prior to 2023, despite the government’s target to oust coal from the generation mix by the middle of the decade.

But two major gas-fired plants, EPH’s 1.3GW South Humber Bank, and ESB’s 366MW Corby plant, were rejected, although the latter must close by 2023 anyway under a limited life derogation.

UK power capacity totalling 54.1GW prequalified for the auction unconditionally.

A further 26.5GW conditionally prequalified, while 3.7GW was rejected.

The total prequalification figure, including conditional and unconditional offers, was 80.6GW, down from the 74GW that prequalified in October last year for delivery at the start of winter 2020.

This reflects the strength of competition in the market for capacity contracts and already indicates a low clearing price in the auction set for February next year.

A total 4.6GW of battery storage projects conditionally prequalified, across 227 individual projects. This marks a huge jump forwards for the battery storage sector. This is up from around 100 projects year on year.

The UK’s energy department said back in July it would target 50.1GW of capacity from the auction, termed a T-4 auction because it is held four years in advance of delivery.

This target is down from the 52.4GW procured in the December 2016 auction for 2020-21. This indicates a marginal easing of supply security concerns going into the next decade, with less capacity expected to be required to back up variable supply from renewable sources.

The February T-4 auction is two months later than originally anticipated, which developers looking to build large-scale CCGTs have previously told ICIS will put additional pressures on financial close and construction deadlines (click here to read story). jamie.stewart@icis.com

By Jamie Stewart