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Contracts for Difference
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.
The Capacity Market is one of the key policies of the Electricity Market Reform Programme. This is a brief overview of the key elements of the Mechanism.
All companies that wish to participate in the Capacity Market will first need to register to set up an account on the EMR Delivery Body. Guidance of how to register an account is provided here.
Before participating in a Capacity Auction, companies need to prequalify the generation or DSR resources for which they are seeking Capacity Agreements. This section explains the prequalification process.
A number of information exchanges between the Delivery Body and Applicants occur in the period between Prequalification Results Day and the Auction. This section provides details of these submissions.
The Capacity Market Auction is the competitive process to award Capacity Market Agreements to meet the target capacity for the relevant Delivery Year. Details of the process are covered here.
New Build, Refurbishing and Unproven DSR CMUs may have to make further submissions to the Delivery Body if successful in the Auction, before Credit Cover can be released. Find out more in this section
CMUs which have secured a Capacity Agreement at an Auction must deliver against their Capacity Obligation at any time of system stress during the Delivery Year, or face a financial penalty. Find out more in this section.
The Regulations and Rules include two methods for providers to mitigate the risk of penalties if they are unable to meet their obligation, physical secondary trading and Volume Reallocation. This section provides more information on obligation trading.
The Capacity Market Document Library contains Guidance Documents, Auction Results, the Capacity Market Register and Presentations from our Information Coordination Events.
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BEIS - CM
EMR SETTLEMENT LTD
OFGEM - CM
ELECTRICITY CAPACITY REGULATIONS
CM RULES 2015
Terms and Conditions