Correspondence

Full details of auction parameters and interconnector de-rating factors

Published 15 July 2025

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This publication is available at https://www.gov.uk/government/publications/capacity-market-auction-parameters-letter-from-desnz-to-neso-july-2025/full-details-of-auction-parameters-and-interconnector-de-rating-factors

Table 1: Auction parameters  

T-1 Auction for delivery in 2026/27 T-4 Auction for delivery in 2029/30
Auction target capacity 5.8 GW 39.1 GW
Demand curve: minimum capacity at price cap 4.8 GW 37.6 GW
Demand curve: maximum capacity at £0 6.8 GW 40.6 GW
Reliability Standard 3 hours LOLE 3 hours LOLE
Net CONE £49/kW/yr £49/kW/yr
Price Cap £75/kW/yr £75/kW/yr
Price Taker Threshold £25/kW/yr £25/kW/yr
15-year agreement threshold N/A[footnote 1] £350/kW[footnote 2]
9-year agreement threshold (for eligible Declared Low Carbon CMUs only) N/A[footnote 1] £205/kW[footnote 3]
3-year agreement threshold (for non-Three Year Zero Capex Threshold CMUs) N/A[footnote 1] £65/kW[footnote 4]
3-year agreement zero threshold (for eligible Three Year Zero Capex Threshold CMUs only)[footnote 5] N/A[footnote 1] £0/kW
Indexation N/A[footnote 1] 2024/25

Table 2: Interconnector de-rating factors (DRF)

T-1 auction for the 2026/27 delivery year[footnote 6] T-1 auction for the 2026/27 delivery year[footnote 6] T-4 auction for the 2029/30 delivery year T-4 auction for the 2029/30 delivery year
Interconnector Connection capacity (GW) NESO range (%) DRF (%) NESO range (%) DRF (%)
IFA (France) 2 - - 54-92 62
IFA2 (France) 1.1 - - 54-92 64
ElecLink (France) 1 - - 54-92 68
BritNed (Netherlands) 1.2 - - 46-90 67
Moyle (Northern Ireland) 0.5 - - 7-85 60
EWIC (Republic of Ireland) 0.5 - - 7-85 60
Greenlink (Republic of Ireland) 0.5 - - 7-85 60
NemoLink (Belgium) 1 - - 54-92 68
NSL (Norway) 1.4 - - 51-89 70
VikingLink (Denmark) 1.4 - - 32-86 63
Neuconnect (Germany) 1.4 - - 40-88 63

  1. Multi-year agreements are not awarded in the T-1 auction. ↩ ↩2 ↩3 ↩4 ↩5

  2. The 15-year agreement threshold is adjusted from the previous T-4 value (for the 2028/29 Delivery Year) for inflation, indexed to the 2024/25 inflation level, and rounded to the nearest £5. ↩

  3. The 9-year agreement threshold has been introduced for the upcoming auctions, as described in the Phase 2 response update. The threshold is set as the midpoint between the 3-year (for non-Three Year Zero Capex Threshold CMUs) and 15-year agreement thresholds, rounded to the nearest £5. ↩

  4. The 3-year agreement threshold (for non-Three Year Zero Capex Threshold CMUs) was decreased to £65/kW to facilitate lifetime extensions as described in this consultation response. ↩

  5. As defined in Rule 1.2 of the Capacity Market Rules, as described in the Phase 2 response update. ↩

  6. For the T-1 auction, all interconnectors expected to be operational for 2026/27 already hold capacity agreements for the 2026/27 delivery year. ↩ ↩2

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