Capacity Market
The Capacity Market (CM) is a critical mechanism within the Electricity Market Reform programme that ensures the UK has sufficient capacity to meet future electricity demand.
The CM aims to ensure the future security of our electricity supply at the lowest cost to consumers. It provides a competitive process where energy providers can secure payments for being available when required. This page will guide you through the key stages of participating in the Capacity Market: Capacity Setting, Pre-qualification, Auction, Agreement Management and Delivery. Each stage plays a vital role in ensuring the Capacity Market functions efficiently.
Capacity Market (CM) Interactive
The first step in the Capacity Market process is determining how much electricity capacity is required to meet the UK’s future needs. This decision is crucial to ensuring the country’s energy security. The EMR Modelling Team plays a key role in this by conducting detailed analysis and producing the Electricity Capacity Report, which helps the government decide how much capacity to secure in each auction round.
Key Aspects of Capacity Setting
Each year, the EMR Modelling Team creates an Electricity Capacity Report that outlines proposals for the capacity needed to maintain the security of supply.
You can access past reports here
This process involves refining the demand curve to reflect practical factors and ensure that the auction secures the right amount of capacity. As part of the Capacity Market rules and regulations, we are required to advise the Secretary of State if any adjustments should be made to the demand curve following the pre-qualification process or in light of any additional relevant information. Our recommendations for adjustments, particularly for the T-1 and T-4 auctions, are included in the Demand Curve Adjustment Report which is published in this section.
The Capacity Market considers that no electricity generation technology is available 100% of the time. De-rating factors are applied to reflect the expected availability of different types of generation, such as wind and solar, whose output can vary. Learn more about how these factors help ensure that the capacity secured meets the government’s reliability standard and projects related to de-rating factors.
Pre-qualification is the process that allows companies to register and confirm their eligibility to participate in the Capacity Market auction. It is designed to ensure that all participants meet the required standard to deliver capacity when needed.
Steps in Pre-qualification
Participants must register on the EMR portal [Link to EMR Portal], create user credentials, and then set up their Capacity Market Unit (CMU) and associated components. The registration window is open all year for interested parties. Once registered, prospective Capacity Market Participants can add additional users to their portal account, add companies to their portfolio and create generating units they wish to prequalify for the Capacity Market Auctions.
Once registered, participants submit their pre-qualification applications, which must include all relevant exhibits and supporting information. This process typically takes place over an eight-week period, usually between July and September. Applications must be created and submitted through the EMR DB Portal.
Applications are reviewed, and the results are released on pre-qualification results day. If a participant is conditionally prequalified, they must complete additional activities such as addressing any outstanding requirements.
Should an applicant disagree with the outcome made by the EMR Delivery Body following the prequalification assessment, they may raise a dispute in the EMR DB Portal to have the decision reviewed.
Once all applications have been assessed and the disputes process has concluded, successful applicants will be entered into the capacity auction and must complete any relevant pre-auction activities.
The Capacity Market Auction is a competitive process designed to award Capacity Market Agreements to meet the target for the specified delivery year. Only Capacity Market Units (CMUs) that have successfully prequalified and, when required, confirmed their entry will be eligible to participate in the auction.
The auction operates through a descending clock format, where participants bid by indicating the lowest price at which they are willing to provide capacity. The auction continues until the required capacity is secured at the most cost-effective price.
- Pre-Auction Activities: Before the auction, participants can attend practice auctions, webinars, and other training sessions to optimise their bidding strategy. They can also review the final Capacity Market Register.
- D-15 to D-10 activities: Eligible applicants should complete activities relevant to their CMU type such as confirmation of entry, max obligation period and DSR bidding capacity.
- Mock Auction: Applicants will take part in the Mock Auction. This is also an opportunity to review the data, test Auction system credentials and learn about the Auction system.
- Auction Results & CAN Release: Eight working days after the auction clears, the final results are published. The Capacity Agreements (CANs) are then issued 20 working days later. Find further guidance documents here.
The T-1 Capacity Auction for delivery in 2024/25 concluded on 20th February 2024, 15:15 GMT. The results of the Capacity Auction are that 7639.609 MW is procured across 277 CMUs.
The T-4 Capacity Auction for delivery in 2027/28 concluded on 27th February 2024, 10:45 GMT. The results of the Capacity Auction are that 42830.829 MW is procured across 540 CMUs.
T-1 Capacity Auction (Delivery Year 2025/26)
The T-1 Capacity Auction for Delivery Year 2025/26 concluded on 5 March 2025 at 10:00 GMT (Round 11). The Auction successfully procured 7,936.289 MW across 246 CMUs. The Clearing Price is £20/kW/year.
View the T-1 Final Results here
T-4 Capacity Auction (Delivery Year 2028/29)
The T-4 Capacity Auction for Delivery Year 2028/29 concluded on 11 March 2025 at 11:30 GMT (Round 3). The Auction successfully procured 43,055.073 MW across 669 CMUs. The Clearing Price is £60/kW/year.
View the T-4 Final Results here
To view the results in Excel format (Appendix A), as well as any historic results, please click here.
Once capacity agreements are awarded, participants enter the agreement management stage, where they must fulfil their obligations as outlined in the capacity market rules. Different types of capacity market units (CMUs) have different requirements, depending on whether they are new, existing, or demand-side response (DSR) units.
Types and requirements
Prospective CMUs (New Build & Refurbishing CMUs) have obligations relating to the progress of their project delivery before they are commissioned and operational. These obligations ensure that the project will be ready to deliver for the relevant delivery year to which their capacity agreement relates and for the duration of that agreement.
Existing CMUs are sites that are already established, commissioned and operational. Existing CMUs are required to ensure that they can deliver during the relevant delivery year to which their capacity agreement relates.
Demand Side Response (DSR) CMUs are categorised into proven and unproven depending on the status of the unit at the time they prequalify. A proven DSR has an obligation to ensure that they can deliver during the relevant delivery year to which their capacity agreement relates. An unproven DSR has the same obligation but must first complete a test to confirm that it is operational.
Other useful information
A capacity agreement can be terminated if a CMU fails to meet its key obligations outlined in the CM Rules. The delivery body (DB) issues a termination notice to the capacity provider when a termination event occurs. Capacity providers then have the option to either submit a dispute to the (DB) or send a request to the Secretary of State to either have the termination notice withdrawn or extended.
Capacity Market participants face a risk of being penalised should they be unable to meet their capacity obligation. This risk could be mitigated pre-emptively either through 'Secondary Trading' their capacity obligation to another provider or after a stress event through 'Volume Reallocation’ to another provider.
Capacity Providers can request the delivery body to review the following for any of their CMUs:
- A request to change address for any prospective or DSR CMU;
- Register a security interest;
- Transfer a CMU to another company;
- A request to investigate a factual inaccuracy on any relevant capacity market register or capacity agreement.
Once the capacity agreements are in place, providers must deliver against their obligations during the delivery period, which runs from 01 October to 30 September.
For example, the 2024 delivery year runs from 01 October 2024 to 30 September 2025.
Capacity Market Notices
A Capacity Market Notice is a signal four hours in advance that there may be less generation available than National Energy SO, acting as System Operator, expects to need to meet national electricity demand on the transmission system taking into account additional operational reserve requirements. The notices are intended to be a signal that the risk of a System Stress Event in the GB electricity network is higher than under normal circumstances.
Capacity Market Notices are communicated automatically by National Energy SO systems to the following website: gbcmn.nationalenergyso.com.
During a System Stress Event
Providers must supply their committed capacity during times of system stress, which can occur due to shortages in electricity generation or demand spikes. Providers who fail to deliver during these events may face financial penalties.
This structured process ensures the Capacity Market functions effectively, securing the UK’s electricity supply while providing opportunities for energy providers to participate in this essential market. If you are interested in getting involved or need further information, visit our detailed knowledge Site.