The Capacity Market: “With the value in today’s electricity market spread between capacity, balancing services and energy itself, DSR resources should play both the long game and a wide one.”
Dr Alastair Martin, Founder and CSO, Flexitricity
- “As we predicted, the first T-1 top-up capacity auction, which was highly pressurised and oversubscribed, has cleared at the lowest price of any auction so far in the Government’s Capacity Market." -
"Demand-side response (DSR) resources that have participated in the T-4 main auctions from the beginning, will earn more than three times as much for the same delivery year. While the T-1 auctions do provide a route in for capacity which missed out on T-4, it’s clear that waiting until the last minute, when the market is nearly saturated, is inferior to planning ahead and competing directly with the biggest power stations."
“This doesn’t mean that the main capacity market will always deliver all of the business case for developing flexibility. The fourth T-4 main auction also cleared low – but this sets up a potential even lower price when the matching T-1 auction arrives in three years’ time. It also shows that the major generators believe in higher energy prices in future. With the value in today’s electricity market spread between capacity, balancing services and energy itself, DSR resources should play both the long game and a wide one.
“With the right partner, DSR participants looking for long term benefit through T-4 auctions will reap the greatest rewards. The fundamentals point to higher clearing prices, and if one particular year is low, any new-build resources can opt to commit to just one year, freeing them up to return the following year to try for a better price.
“DSR competes well in the Capacity Market, contributing to these latest low auction prices and thus saving money for bill-payers. Flexitricity has consistently demonstrated satisfactory performance for 100 per cent of its DSR capacity, and holds 91% of the Proven DSR to clear in the most recent auction.
“But the Capacity Market was never intended to stand on its own. Those looking to gain most from their flexible energy assets must look beyond it into energy markets. Industrial and commercial (I&C) energy users, CHP generators and battery developers should all question whether they’ve yet gained maximum value from their flexibility.
“This is why Flexitricity has invested for the future by entering the energy trading arena, opening the door to the lucrative Balancing Mechanism for I&C customers, distributed generation and batteries. At the same time, we will continue to pioneer new services in partnership with the National Grid and other like-minded organisations to make energy cheaper, greener and more secure for everyone.”
Issued by Weber Shandwick on behalf of Flexitricity.
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Notes to Editors
Flexitricity created and now operates the first, largest and most advanced demand-response portfolio in GB and has unsurpassed knowledge of the market and its requirements.
Headquartered in Edinburgh, Flexitricity partners with businesses throughout Great Britain to provide reserve electricity to National Grid. The word “Flexitricity” means “Flexible Electricity”. The company looks for flexibility in electricity consumption and generation, creating revenue for energy users and generators as well as reducing national CO2emissions and helping to secure energy supplies.
Their team is fully engaged at industry and regulatory level and has a track record that demonstrates innovation and delivery success.
Flexitricity is part of the Alpiq Group, a leading Swiss electricity and energy service provider with a strong presence across Europe.