Capacity Market: improving the framework

Having considered the responses received, we will make changes to the Capacity Market Rules, amending the approach to de-rating storage in the Capacity Market. This should correct an over-valuation of the contribution to security of supply made by short duration batteries. We will also introduce new rules around the demonstration of satisfactory performance days and some other minor amendments. 

• Amending the de-rating methodology related to storage Capacity Market Units (CMUs). This is in response to concerns raised by stakeholders that the emergence and growth of battery storage in the capacity market has the potential to pose a risk to security of supply if those batteries are unable to generate for the full duration of stress events. The proposed change would ensure that storage capacity is rewarded appropriately for its contribution to security of supply and reduce the risk of insufficient capacity being secured to meet our reliability standard.
• How delivery assurance can best be provided for unproven Demand Side Response (DSR) awarded agreements in the 4-year-ahead (T-4) auctions to provide the government with the ability to replace any failing capacity through the 1-year-ahead (T-1) auctions;
• Providing the possibility to Capacity Providers to re-take a metering assessment;
• Shifting the planning consent deadline to January to avoid the Christmas period;
• Strengthening the arrangements relating to Satisfactory Performance Days (SPDs) to improve confidence that Capacity Providers are physically capable of delivering as per their capacity obligations; and
• Disaggregating some of the generating technology classes to improve transparency, support analysis and allow the potential for more specific application of de-rating factors in future.