Limejump

T-4 2024/25 Capacity Market Auction – Highest T-4 price since the 2016 Prequal

T-4 2024/25 Capacity Market Auction out-turned at £18/kW which is the highest T-4 price since the 2016 Prequalification which was £22.5/kWThe auction saw 40.8GW awarded a contract out of the 52GW entering the auction. Existing generation, existing interconnectors, and new interconnectors who had previous taken a contract, accounted for 90% of the volume awarded.

Of the remaining 10%, 4.3% (1.7GW) went to New Build generation which was split 80% gas and 20% renewable generation. The majority of gas related to 3 Drax OCGTs (0.9GW). 20 new batteries took a contract (none of the 5-hour duration batteries who prequalified).  Demand Side Response accounted for 2.6% (1.1GW) of awarded volume over 136 units, with the majority being unproven. The remaining volume was won by the new Viking Interconnector with Denmark (0.7GW) and a refurbishment at the Connah’s Quay power station (0.7GW).

Interestingly, the existing generation not taking a contract this year, but who did the previous year, included three nuclear power stations (Dungeness B, Heysham 2 and Torness) which accounted for 1.5GW. Similarly, first Hydro’s pump storage at Dinorwig Unit 1 and two gas power stations (Keadby 1 and Rocksavage) totaling 1.7GW did not take a contract this year but did in the previous year.

Limejump won 11 T-4 contracts including two 15-year contracts, one for the 46MW onshore windfarm at Crossdykes in southwest Scotland (which will be the first subsidy-free windfarm to enter the Balancing Mechanism) and another 50MW for Minety battery unit in Wiltshire. The return to levels seen in early T-4 auctions will provide confidence for further new build investment cases. We anticipate continued upward pressure as existing CCGTs and nuclear exit the market offset partly by new interconnectors.

Post a Comment