The EMR delivery body published its capacity market registers for the T-1 2025/2026 and T-4 2028/2029 auctions this week, which are expected to take place in March 2025. For this round of capacity market auctions, the government set target capacities of 44GW and 6.5GW for T-4 and T-1 respectively.
For this T-4 auction we saw the tightest margin between government target and qualified capacity, with approximately 45GW of derated capacity qualifying for auction against the target of 44GW. This indicates that next year’s auction prices will likely continue to stay at the highs observed in the auctions of the last two years.
Approximately ~36GW of existing generating and interconnector CMUs have qualified this auction round, leaving an 8GW shortfall for refurbished and new-build assets to make up the gap. This is slightly lower than the last T-4 auction, which had ~37GW of existing CMUs – a large proportion of this reduction is driven by a smaller existing gas fleet qualifying for auction.
A significant volume of de-rated new build capacity contributes to the overall auction register, with ~0.6GW of new build OCGTs, ~0.5GW of reciprocating engines and ~4.1GW of new build batteries qualifying for auction. Given the dominance of these new build assets, it is likely that the clearing price will be set by one of these new units.
New build gas capacity remains low despite high clearing prices in the previous two T-4 auctions (see chart), with no CCGTs and only ~1.1GW of de-rated new build engines qualifying. This could be driven by ongoing consultations by government to gather views around proposed changes to the Capacity Market to support conversion of unabated gas to low carbon alternatives, potentially creating market uncertainty.