Capacity Market
The Capacity Market (CM) is one of the key policies of the Electricity Market Reform programme. The CM aims to ensure the future security of our electricity supply at the lowest cost to consumers. The Capacity Market is open to all capacity providers including new and existing power stations, electricity storage plant, capacity provided by voluntary demand reduction and, from 2015 onwards, interconnectors. It offers a steady, predictable revenue stream on which providers can base their future investments.
In return for Capacity Payments revenue, providers must deliver energy at times of system stress, or face penalties.
Potential providers secure the right to receive capacity revenues by participating in a competitive auction process which will set the level of Capacity Payments. Capacity Auctions are held four years ahead of delivery, with a subsequent auction held one year ahead. The first Capacity Auction took place in December 2014, for delivery obligations beginning in October 2018.