UK Proposes Major Capacity Market Auction Changes to Boost Competition and Clean Energy
The UK government is proposing significant changes to its capacity market auctions to enhance competition, attract investment calculator, and mitigate strategic bidding risks. Key among these is a suggestion to increase the rounding threshold for reporting excess capacity to 3 GW.
The government is seeking diverse opinions on these changes through consultations with industry stakeholders, including business associations, trade unions, and parliamentary committees. This engagement aims to ensure a balanced perspective on trade and regulatory changes.
To reduce administrative burdens, demand-side response aggregators may see eased reporting requirements for assets with power output capacity below 20 kW. Additionally, battery energy storage (BESS) asset owners could self-nominate their bidding capacity, provided it's above a minimum of 50% of their grid connection capacity, to mitigate degradation risk.
The government is also exploring measures to attract greater fidelity investments in power carbon capture, usage and storage (CCUS) and hydrogen to power (H2P) technologies. This includes a first-round auction with a higher price cap and floor.
The proposed changes to the UK's capacity market auctions aim to secure more new build capacity and reduce strategic bidding. The government's engagement with stakeholders and proposed measures to ease administrative burdens and attract investment calculator in clean technologies demonstrate a commitment to a sustainable and resilient energy future.
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