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DSR success in latest Capacity Market auction

This week’s Capacity Market transitional auction for demand side response in the scheme for the coming winter has concluded, securing businesses a healthy revenue for their involvement in the scheme.

The auction procured 312MW at £45k/MW, which is more than six times the price secured at the February auction for generators participating in this winter’s scheme.

Successful businesses who secured contracts in the auction may be required to turn down consumption during peak demand periods this winter, but will receive payments even if the turn down is not required.

What does it mean for my business?

Revenue: We can help you to participate in the Capacity Market by using your assets to generate a revenue for multiple years through these balancing services.  This is a simple means to recoup some of the capacity charges detailed below.

Cost: This latest auction result has less of an impact on the cost of the scheme for businesses compared to February’s result because it only impacts 300MW of the total 55GW secured for this winter.

The cost outcome of February’s auction was ca. £380million, compared to the £14million cost of procuring 312MW at the clearing price of £45/kW.

This means that although the £45/kW is higher than many expected, the effect on this winter’s Capacity Market bill is less than 4% of the costs associated with the earlier auction.

Businesses with half-hourly meters can now expect to pay an additional levy of around £40/MWh between 4pm and 7pm, November to February for winter 2017/18 – a cost that is expected to rise to over £100/MWh in subsequent years.

The introduction of the Capacity Market this winter – and its forecast cost increases as the scheme evolves in coming years – all mean that it pays to focus now on demand management to create a strategy that avoids high consumption during the costliest winter periods.

For more information on how Inenco can help your business to participate in Demand Side Response or focus on demand management, contact us today on 08451 46 36 26 or email