Capacity Market–CCGT & Storage
By Paul Homewood
A few more thoughts about the Capacity Market Auction for 2020/21.
Lack of new build CCGT
As I mentioned earlier, there only appears to be about 600MW of new CCGT, and half of this is expanding an existing site.
It has been argued that the government should not worry about which particular technologies win out. We should instead let the market decide which is cheapest.
And to the extent that the objective is to provide standby capacity during peak periods, this may be OK.
This argument however ignores a much wider concern, and that is that we will continue to need a lot of gas capacity for baseload, even well into the 2030s. (Assuming coal is phased out, and new nuclear is limited).
DECC’s Energy and Emissions Projections, for instance, still assume gas to be generating nearly 100 TWh in 2030. This is as much as was produced last year.
Because some older plant will be shut down, DECC say that an extra 15GW of gas capacity will be needed by the mid 2020s.
While small scale peakers, such as diesel generators, battery storage, OCGT and demand side response may be able to cope for short periods, but can they really provide 100 TWh a year, week in week out?
As the BEIS analysis of levelised costs pointed out, CCGT is much more capital intensive, in terms of capacity. That is why new CCGT projects are finding it so hard to compete at the Capacity Auction.
But because CCGT is so much more efficient, its cost per MWh are also much less:
Put simply, alternatives to CCGT could neither produce at the outputs demanded, nor do it commercially viably.
Various storage projects have won 3.2GW of contracts. Centrica, for instance, boast that their 49MW battery storage facility at Roosecote, which will be one of the world’s largest of its kind, will be capable of holding enough power to meet the needs of around 50,000 homes, responding to fluctuations in demand in under a second.
But the real question is just how long this power can be supplied for.
Centrica will earn over a million pounds a year in capacity payments for Roosecote, but would it have been worth building otherwise?