Reforms outlined for Britain’s capacity market to “secure a clean energy future”

Net zero

The UK Government says its “significant proposals” to reform Britain’s Capacity Market will improve energy security and deliver a more secure transition to net zero.

The Capacity Market is the scheme that the Government says sits at the heart of its strategy for ensuring the security of electricity supply in Britain using competitive auctions to make sure there is enough reliable capacity to meet Britain’s peak electricity demands, which safeguards against the possibility of future blackouts.

The Department for Business, Energy and Industrial Strategy (BEIS) says that since its introduction in 2014, the landscape in which the Capacity Market operates has shifted with renewable energy now making up a significant proportion of Britain’s electricity generation system.

To ensure the Capacity Market is fit for the future, the Government says it is publishing action plans to ensure the scheme keeps pace with this transition to cleaner energy sources and technologies and can support the delivery of a decarbonised power system by 2035, without compromising the security of supply.

As we move towards cleaner and cheaper energy, it is essential that the UK provides secure and affordable energy for all.

This includes consulting on new contracts for low-carbon technologies to incentivise their participation in CM auctions, creating new timelines and requirements for oil and gas generators to reduce emissions from 2034, such as through implementing carbon capture and hydrogen to decarbonise and reducing running hours and strengthening the scheme’s ability deliver security of supply in times of electricity system stress.

Energy and climate minister, Graham Stuart, said: “As we move towards cleaner and cheaper energy, it is essential that the UK provides secure and affordable energy for all.

“The plans set out today will deliver this reliable energy and ensure the scheme that sits at the heart of Britain’s energy security is fit for the future.”

The Government says innovative technologies, such as batteries, are playing an increasingly important role in keeping the lights on across Great Britain. The BEIS says it expects new technologies, such as Carbon Capture, Utilisation and Storage (CCUS) and hydrogen power and storage, to come online over the coming decade.

It’s vital that we decarbonise our electricity system completely by 2035.

The proposals include incentivising greener, flexible technologies to compete in CM auctions, ensuring a clear pathway for carbon-intensive forms of capacity as the UK transitions to net zero, underpinning these efforts with a proposed new lower emissions limit in the Capacity Market and taking steps to strengthen the scheme’s ability to deliver security of supply by reforming the CM’s approach to performance testing.

Renewable UK’s Chief Executive Dan McGrail, said: “It’s vital that we decarbonise our electricity system completely by 2035, so this consultation represents an important step forward in that process.

“We need to incentivise more investment in new low carbon flexibility in our modern energy system based on renewable technologies including wind, solar, tidal stream and green hydrogen. This will strengthen the UK’s energy security, enabling us to move closer towards energy independence in the years ahead.”

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