Capacity Market could open up to renewables

Renewable energy generators could be allowed to compete for Capacity Market contracts as part of a review of the mechanism launched by the UK Government.

The Department for Business, Energy & Industrial Strategy (BEIS) has opened a “call for evidence” (CfE) to gauge the industry’s views on the idea.

BEIS suggests that wind or solar farms combined with battery storage – not necessarily on the same site – could be allowed to compete for contracts under the Capacity Market which was introduced in 2014 to ensure security of supply at periods of peak demand.

Revising the penalty system for failing to delivery capacity could encourage more developers to combine energy storage with renewables, the CfE said.

Bids as early as 2023

Previously renewables have failed to qualify to enter the capacity market auction due to being funded through subsidies.

But with subsidies for many projects ending, some alternative energy schemes could begin bidding as early as 2023.

The non-dispatchable nature of renewables – being that they can’t be turned on and off by operators – has also been a barrier in the past, hence the interest in storage.

Industry reaction

Frank Gordon, Policy Manager at the Renewable Energy Association, said: “This review is much needed given the amount of fossil generation delivered by the capacity market to date, effectively providing a subsidy for coal, gas and diesel generation, while cheaper renewable technologies have been denied access.

“As we have consistently said, the problem with the Capacity Market is that it fails to tackle all elements of the Energy Trilemma – completely ignoring both value for money and decarbonisation – unlike the remaining renewable support schemes which tackle all elements.

“We encourage the Government to examine how renewables can be included in future auction rounds as soon as possible, as well as address the current barriers that make it more difficult for energy storage projects to compete.”

> Read the call for evidence