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T4 Capacity Auction For 2023/24

March 18, 2020

By Paul Homewood




The results of the latest Capacity Market auction have been announced, this covering winter 2023/24.

Capacity amounting to 43.7 GW has been bought at a price of £15.97/KW/Yr, a cost of £700 million pa. A further 1.6 GW has been bought in previous auctions on 15-year contracts. It is likely that up to another 10 GW will need to be bought in in future auctions for 2023/24.


The main highlights are:

  • Existing capacity is supplying 34 GW of the auction, incl:

1.3 GW Coal

18.3 GW CCGT

4.5 GW Combined Heat & Power

4.0 GW Nuclear

  • New build only amounts to 1.8 GW, of which the only CCGT is Keadby (0.8 GW), which according to Timera was already committed – in other words was going to be built anyway.
  • Three new interconnectors, NSL, IFA2 & Eleclink, supply another 2.6 GW.

In short, the Capacity Market mechanism is still not incentivising new build CCGT, which will be desperately needed when coal power finally disappears, along with older nuclear and gas power plants.

The Committee on Climate Change reckon that we will need about 20 GW of new capacity to offset these retirements by 2030.

The problem is that lower capital costs alternatives, such as OCGT, Demand Response and Storage, can out compete CCGT at the auction. However, none of these options are capable of providing reliable, dispatchable power for more than a few hours, and not the days on end which may be necessary at times.

OCGT, while cheap from a capital cost point of view, has very high running costs, and is therefore only viable at times of peak power prices. Worse still, DSR and Storage only have capacity for an hour or so. All of these are useful for catering during periods of demand spikes, but useless for providing reliable baseload.


The auction also highlights the growing reliance on interconnectors to Europe. Existing and new build will provide 5.3 GW of our standby capacity by 2023/24, a highly risky arrangement. Given that they are two-way arrangements, power will flow to the highest bidder, which means we may have to pay a premium to access our own generation.


Laughingly, as one our readers pointed out, our MPs seem to believe these interconnectors are “zero carbon”. This is is what his local MP, Caroline Dinenage, wrote on her Facebook, following a visit to the IFA2 terminal in Hampshire:

“…The Interconnector is projected to go live later this year and will be capable of exchanging 1,000 MW of power between Britain and France, enough to run around 1,000,000 homes with zero carbon power.

National Grid estimate that their interconnectors save over 17,000 tonnes of CO2 per month. IFA2 is a great opportunity for the Gosport constituency to play a huge part in the UK’s carbon net-zero targets…”

As he inconveniently reminded her in a letter, an interconnector does not create any power but merely passes on whatever the market dictates and Holland, Belgium and France have a mix of power sources. They are also connected to the European Grid so the power could have come from anywhere.

But as long as the carbon dioxide does not appear against the UK’s tally, that is somebody else’s problem.

  1. spetzer86 permalink
    March 18, 2020 7:16 pm

    Is this source reliable post Brexit? Seems like an EU power supply could be prone to prioritizing to EU demand.

    • Adam Gallon permalink
      March 18, 2020 9:07 pm

      A French link, will prioritise French demand, never mind any other neighbouring country. Then it’ll be “Right, who’s paying the most”? assuming that there is any spare capacity.

    • March 18, 2020 9:57 pm

      This came up today about UK importing coal powered electricity and coal for steel
      and not counting the CO2 in our tally

      Our new report, The Great Carbon Swindle, calls for the introduction of a Carbon Border Tax on carbon-intensive imports to reduce global emissions and better support domestic industries.
      Read the report here:

  2. jack broughton permalink
    March 18, 2020 8:02 pm

    Would point out that OCGTs are very efficient and are also cost effective when operating in low load factor mode. They can easily be converted to CCGT if the load factor improves to justify that. Many of our CCGTs are being operated load-factors so low that they cause both inefficient operation and are damaging to the plant (i.e. reducing the expected life of the asset).

    OCGTs are greatly preferable to recip. engines at the larger sizes needed for the grid.

    • March 18, 2020 9:38 pm

      Yes, I should have pointed it out.

      Of the new capacity, OCGT makes up 23 MW, and reciprocating engines (which presumably includes diesel) tot up to 681 MW!

  3. Pancho Plail permalink
    March 18, 2020 8:06 pm

    The scientific ignorance of our political classes is breathtaking.

    • Chaswarnertoo permalink
      March 19, 2020 1:02 pm

      Arts degrees, or, worse, Piss Poor Ejumacashun.

    • Gerry, England permalink
      March 19, 2020 1:53 pm

      I don’t think you need the word ‘scientific’ in your post.

  4. Phillip Bratby permalink
    March 18, 2020 8:52 pm

    There are hundreds (if not thousands) of small and inefficient diesel and gas generators being given planning permission all around the country. It is all totally random and uncoordinated, but that is the way with local planning permissions given by ignorant planning officers and planning committees. It is total madness and we are all paying for the ignorance of local decision-makers who think they are saving the planet because they are convinced that these generators are enabling the use of more renewable energy facilities, which are producing clean, green electricity and saving us from the “climate emergency”.

  5. John OReilly-Cicconi permalink
    March 19, 2020 9:04 am

    Dear Paul

    should we not be building gas and rhodium/salt nuclear plants as reliable sources of power? Believe the latter is capable of destroying ” nuclear waste ” as well, though this may be unproven as only know of Norwegian plant. If it can win, win all round.

    Sadly politicians remain without common sense.

    Yrs, john o’r-c


    • Ivan permalink
      March 20, 2020 11:30 am

      I think you are referring to thorium reactors. There has been some widespread misunderstanding of the situation in the Netherlands (not Norway) regarding the Petten reactor there. This is not a Thorium reactor, it is a research facility reactor built in 1961, also used to make medical radionuclides. It has been doing some experiments, but is not a working thorium reactor. There is no working thorium reactor anywhere.

      The big issue is the likely enormous cost of a first-of-type reactor to a new technology. Thorium reactors have quite a lot of hard-to-solve complexities, one of the worst being that they aren’t self-starting, you have to set them off with a different reaction. A previous example is when Britain decided its second generation reactors would be AGRs, for some apparent advantages, rather than known PWR technology, it ended up being a huge mess and waste of money, and that was before the complication of modern safety standards.

      PWRs can also burn nuclear waste. You just have to build a mixed oxide (MOX) plant to make the fuel out of the waste. The French firm AREVA built a MOX plant in France for about €1bn. We tried to build a MOX plant in Britain, but after spending about £1.5bn we gave up. The French also built one for the Americans. But after running into American rules, regulations and special requirements, it ended up costing about $5bn to $7bn – they won’t admit the real number.

      We can see a similar lesson from our present attempt to build PWRs, a well-known technology, to modern safety rules. Even experienced reactor builders like the French have had appalling problems. And that is when they apparently know what they are doing. The Chinese apparently avoid this problem, but it is generally suspected that where getting it working conflicts with precisely complying with every little rule, they favour the first.

      This then is the problem of Thorium reactors, that there would be quite enormous development costs in making the first few, and we wouldn’t know until we did that the likely unit cost of the bulk produced item.

      • jack broughton permalink
        March 21, 2020 3:51 pm

        Interesting that the Russian VVER seems to be the most successful export reactor, with at least 14 in construction at present in some of the world’s poorer countries. I’m reminded of a Euan Mearns post in which he said that the cost of nuclear power was what one wanted it to be: i.e. set more by politics than financing.

        I also wonder if the AGRs were as bad as people make them out. The 4 in the UK have operated fairly well for over 40 years now. They had many business and technical problems, but so do most high-tech large projects.

  6. The Man at the Back permalink
    March 19, 2020 9:26 am

    O/T but harking back to the previous couple of posts –

    The government advice on Covid-19 seems to be based on how bad things have been in Italy – Italy is often used by commenters to counter other commenters.

    This is worth reading

  7. March 19, 2020 9:49 am

    Can you please explain the £15.97? Is this for a specific quantity (MWh)? Thanks

    • March 19, 2020 10:08 am

      Yes, sorry.

      It’s £15.97/KW/Yr

      In other words, a 1 GW power plant will get £15.97 million pa

  8. BLACK PEARL permalink
    March 19, 2020 1:58 pm

    Might seriously start looking into installing a home generator ….. just in case

  9. Bill Hutchison permalink
    March 19, 2020 2:38 pm

    When we do actually leave after the Transition Period we will no longer be in the Internal Energy Market and the EU spelled out the consequences for the UK in a Preparedness Notice dated 27 April 2018 “WITHDRAWAL OF THE UNITED KINGDOM AND THE INTERNAL ENERGY MARKET”. (Google EU Preparedness Notices and scroll down to “Energy” and then “Energy Market”).

  10. Ivan permalink
    March 20, 2020 10:55 am

    When you look at official UK carbon output statistics, on the standard production basis, imports of anything contribute nothing whether they are imports of electricity, raw materials mined and processed elsewhere, or manufactured goods, or services like cloud computing. This method of calculating the UK’s carbon output is why the National Grid can say interconnectors reduce the UK’s recorded carbon output, even though obviously it is not low carbon. In fact a lot of the time if the UK wasn’t importing what would be switched off would probably be coal plants in Germany.

    Calculating carbon output on a consumption rather than production basis is much fairer. By that measure the UK did not start to reduce its carbon output from the 1990 level until about 10 years ago. That is because increasingly carbon-intensive production was in effect outsourced to other countries. Estimating the carbon content of imports is quite difficult, so these estimates are subject to error. A carbon border tax would also be sensible, but hard to apply for the same reason.

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