Capacity Market auctions clear at £20/kW for 2025-26 and £60/kW for 2028-29
The Electricity Market Reform (EMR) Delivery Body has made announcements regarding the T-1 and T-4 Capacity Market (CM) auctions for delivery years 2025-26 and 2028-29 respectively.
- The T-1 auction cleared at £20.00/kW, with 7.94GW of de-rated capacity receiving an agreement procured across 246 Capacity Market Units (CMUs).
- The T-4 2028/29 auction cleared at £60.00/kW, with 43.06GW of de-rated capacity receiving an agreement across 669 CMUs.
Both clearing prices are lower than the auctions held in the previous year. However, this is the third year in a row that the T-4 CM auction has cleared at or above £60/kW.
The T-1 auction exceeded its target capacity by 436.29MW. Over 75% of the cleared capacity comprised existing generation or proven demand-side response (DSR). Unproven DSR comprised 6% of awarded capacity, while 9% was awarded to New Build Generating CMUs.
The chart below explores the de-rated capacity participating and the de-rated capacity procured in each T-1 auction, alongside the published clearing price. Clearing prices have declined over the past few years, with higher levels of de-rated capacity participating, and lowering concerns about winter peak margin since the Russian invasion of Ukraine.
96% of capacity entering the T-4 auction received an agreement, as did most of the existing capacity in the T-4 auction (a small number of combined heat and power – CHP – plants were the exceptions). 81% of the capacity awarded an agreement was either existing or proven DSR.
A record number of Battery Energy Storage Systems (BESS) and DSR were successful in the auction, including a wide range of 1-hour to 8.5-hour storage, with the modal 2-hour duration. The chart below explores the de-rated capacity participating and the de-rated capacity procured in each T-4 auction, alongside the published clearing price.
The annual cost for delivery year 2025-26 from the recent T-1 auction and the previous T-4 auction in 2021-22 is £1.45bn (excluding prior multi-year contracts and inflationary adjustment). Despite a lower clearing price in the T-1 auction, this is a 44% increase from the year before, due to the substantial uplift in the T-4 clearing price (£12.59/kW).
Consumers can also expect to see further increases in the future delivery years, driven by substantial uplifts to T-4 clearing prices (see the chart above).
See our Electricity Prices Explained Summary Guide for an overview of Third Party Charge drivers.
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