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    The Capacity Market Auction is the competitive process to award Capacity Market Agreements to meet the target capacity for the relevant Delivery Year. Only Capacity Market Units (CMUs) which have successfully prequalified and where necessary, confirmed entry, will be able to take part.
    The Demand Curve
    The capacity sought in the auction is described by the Demand Curve which captures the trade-off between the cost of capacity and security of supply according to the Auction Parameters specified in the Auction Guidelines. The demand curve is established by the Secretary of State, and based on National Grid's Electricity Capacity Report.
    Auction Format
    The Auction is a descending clock, pay-as-clear auction. This means:
    • The price starts at the Auction Price Cap (as set out in the Auction Guidelines).

    • The price is reduced in each round by a set decrement.

    • Bidders submit Exit Bids to retract a CMU from the Auction at a particular price.

    • An Exit Bid is the minimum price at which a Bidder would accept a Capacity Agreement.

    • As the price descends and exit bids are submitted, the total remaining capacity decreases with price.

    • The Auction ends when a price is reached at which the total remaining capacity is equal to the capacity demanded, the "Clearing Price".

    • Successful CMUs (those that have not submitted Exit Bids above the clearing price) all receive a Capacity Agreement at the Clearing Price.

    The Auction is managed by National Grid and conducted via a web-based Auction System.​

    Price Makers and Price Takers
    CMUs that are Price Takers may only choose to submit Exit Bids at a price lower than the "Price Taker Threshold", which is an Auction Parameter determined by the Secretary of State and set-out in the Auction Guidelines.

    By default, all Existing CMUs are Price Takers. 

    CMUs that are Price Makers are free to submit Exit Bids at any price less than the Auction Price Cap.​

    Duration Bid Amendments
    New and Refurbishing Generating CMUs may choose a Capacity Agreement of more than one Delivery Year (up to the CMU's Maximum Obligation Period). If successful, the CMU will receive the Auction Clearing Price each delivery year.

    If the price falls below a particular level, a Bidder may wish to decrease the duration to one year, or in the case of a Refurbishing CMU, choose not to continue with the Refurbishing component of the CMU.  A bidder can achieve these aims by submitting 'Duration Bid Ammendments' via the Auction System.

    The Capacity Market Rules provide for an alternat​ive arrangement, "Variable Price Duration" Auctions, where the price received is a function of the delivery year.  The 2015 Auction will not be a "Variable Price Duration" Auction.​

    Within 24 hours of the Capacity Auction closing, National Grid will notify Bidders whether, based on provisional results, they have been awarded a Capacity Agreement (with the details). National Grid will also notify Government of the provisional results.

    Government may choose to make the Provisional Results public on the morning following the Auction closing.

    Within 2 Working Days of the Capacity Auction closing, the Auction Monitor must report to the Secretary of State on whether the procedures in the Rules and Auction Guidelines have been properly followed in the conduct of the Capacity Auction.

    Within 8 Working Days of the Capacity Auction closing, unless instructed otherwise by the Secretary of State, National Grid will make public the Final Auction Results.​

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