After Capacity Agreements have been awarded for each Auction, Capacity Providers have certain obligations and rights. The obligations that need to be fulfilled will depend on the Capacity Market Unit (CMU) type. See below for more information on the requirements for each CMU type.
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.
A Capacity Agreement can be terminated if a CMU fails to meet its key obligations outlined in the CM Rules. The 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submit a dispute to the Delivery Body or send a request to the Secretary of State to either have the Termination Notice withdrawn or extended.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 are able to 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.
Guidance documents for each of the Agreement Management activities can be found on our knowledge site by clicking Guidance and selecting the Agreement Management Tile. Link to the new knowledge site can be found here.
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