The UK Government said the outcome of the latest round of the Capacity Market ensured guaranteed electricity capacity at a low cost to bill payers.

The auction saw provisional agreements to provide capacity from the start of winter 2017 to the beginning of winter 2018.

It closed at a final price of £6.95kW with the biggest share – over 40 per cent - of the provisional agreements going to existing gas power stations with coal, or co-firing coal and biomass plants, also securing 19 per cent.

The Government pointed out that following its proposals to phase out unabated coal power generation by 2025 there is a significant reduction in the role that it will play in the Capacity Market year on year, with over 30% less coal capacity winning agreements for 2021 than for 2018.

Energy Minister Jesse Norman said:

“Reliable power supplies are essential for businesses to thrive and succeed. Thanks to this auction, homes and businesses can have confidence in the availability of that electricity at the lowest possible cost.

“More widely, the composition of the UK’s electricity supply is now clear beyond the end of this Parliament.”

‘Process shows confidence in process’

Lawrence Slade, chief executive of industry association Energy UK said:

"Another successful Capacity Market auction shows the shared confidence of both Government and the industry in this process. The result, and low clearing price, shows that security of supply is being provided to consumers at the lowest cost.”

The final clearing price proved too low for unproven demand side response.

SmartestEnergy's Robert Owens, VP Demand Side Management, said the final price was “significantly lower than expectations”.

“At this level participation in the balancing or wholesale markets is starting to look like a more attractive option, and we will be exploring with our customers the opportunities therein.”    

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