Part of the government’s Electricity Market Reform package, the Capacity Market will ensure 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 will encourage the investment we need to replace older power stations and provide backup for more intermittent and inflexible low carbon generation sources.
The Capacity Market has also been designed to support the development of more active demand management in the electricity market.
This page contains all the general information on the Capacity Market including the Capacity Market Regulations and Rules. Specific information on the auctions can be found at:
The Electricity Capacity (Amending )Regulations 2015 amends the Electricity Capacity Regulations 2014 (S.I. 2014/2043) to enable electricity interconnectors to participate in the Capacity Market from 2015 onwards, and makes a number of minor and technical amendments to those Regulations; and amends the Electricity Capacity (Supplier Payment etc.) Regulations 2014 to set the settlement costs levy that funds the budget of the Capacity Market Settlement Body, as from 1st April 2015, and to correct a minor drafting error.
The Electricity Capacity (Amendment) (no.2) Regulations 2015 amends the Electricity Capacity Regulations 2014 to substitute a new definition of “relevant grant” and to extend the number of days from 5 to 15 to permit applicants a longer period in which to submit credit cover after receiving a conditional prequalification notice.
The Electricity Capacity (Amendment) Regulations 2016 amends the Electricity Capacity Regulations 2014 (S.I. 2014/2043) to establish an additional Capacity Market auction (the Supplementary Capacity Auction) for
delivery in 2017/18; increase termination fees and credit cover payable under the Capacity Market scheme; make provision in relation to the transfer of Capacity Market obligations; and make a number of other amendments, including in relation to the second Capacity Market transitional auction; and make various minor amendments to the Electricity Capacity (Supplier Payment etc.) Regulations 2014 (S.I. 2014/3354).
The rules provide the detail for implementing the operating framework set out in regulations. This means that the rules focus on the technical and administrative rules and procedures for how the Capacity Market operates and includes matters such as procedures relating to the day-to-day running of the Capacity Market, the process by which capacity providers pre-qualify, and rules for running capacity auctions and issuing capacity agreements to successful bidders.
Implementing Electricity Market Reform provides stakeholders with a comprehensive overview of EMR policy. The document includes chapters on the two main mechanisms that the government is introducing to reform the electricity market: Contracts for Difference (CFDs) and the Capacity Market, as well as detail on measures to encourage greater energy efficiency through the Electricity Demand Reduction (EDR) programme.