National Grid Electricity System Operator (in its capacity as EMR Delivery Body) published the final results of the T-4 Capacity Auction, relating to the 2026/2027 Delivery Year, on 3 March 2023 (published here). The auction cleared at a record high of £63.00/kW/year, which is almost double the clearing price in last year’s T-4 Auction (£30.59/kW/year).
In this article, we consider the CM auction results in detail, together with some industry context and implications.
A total of 43,000MW in Capacity Agreements have been awarded to 542 Capacity Market Units (“CMUs”) amongst 251 applicant companies and 162 parent companies. This is at the lower end of the demand curve (from 42.4GW to 45.4GW, with a target of 43.9GW) set for the auction by the Government in their updated auction parameters published on 20 January 2023 (following an update in NGESO’s recommendations). However, there was a notable increase in the proportion of Capacity Agreements that was awarded for the 15-year term available to new-build projects (as opposed to the more common 1-year term to which existing projects are limited), being 3.41GW (up from 1.96GW in the 2025-26 T-4 auction).
93.42% of the eligible CMUs entering the auction were awarded an agreement.
The fuel type with the greatest share of capacity was gas (67.5%), continuing to be the most substantial winner, followed by interconnectors (15.9%), pumped storage (4.2%) and battery storage (3%).
The biggest news of this auction is EPH securing a 15-year new build contract for its proposed 1,700MW H-class combined cycle gas turbine (CCGT) power station. This project, which EPH has indicated will be carbon-capture-ready, will be the single largest flexible generation asset to be commissioned in the UK since 2012.
At nameplate capacity, 5GW of new-build batteries secured Capacity Agreements, which if built would double the UK fleet. In de-rated capacity terms, 1.29 GW of battery storage projects secured contracts, up from 1.09 GW last year. Whilst most projects were 2 hour duration, 4 hour contracts were awarded to a few projects.
Renewables also saw an increase, although only a total of 76.85MW of onshore wind, offshore wind and solar projects have been awarded contracts. Although this represents an 8-fold rise in the renewable capacity that won contracts last year, it is still a small proportion amongst the total contracts awarded.
Full details of awarded capacity per fuel type are set out below:
Awarded Capacity (rounded to nearest MW)
Total % Awarded Capacity
Storage - Pumped
Storage - Battery
Demand-side response (DSR)
The results clearly display gas continuing to dominate the Capacity Market, including new build capacity, which may give rise to concerns around achieving the Government’s target for a net zero power system by 2035. This will no doubt draw additional attention to the Government’s latest consultation (published on 9 January 2023) on aligning the CM with net zero policy (e.g. by lowering the capital expenditure threshold required of low-carbon flexibility projects). Our recent article on the consultation can be found here.
The face of participating flexibility assets is changing for example:
- Over 750 MW of 4h batteries have been awarded contracts.
- Alongside its Eggborough CCGT facility referred to above, EPH was also awarded a 15-year new build contract for a 299MW 2-hour battery storage project – another example of the increasing scale of battery storage projects in the UK.
The low aggregate capacity procured (relative to the Government’s parameters for the auction) may indicate how increasing costs and uncertainties for new projects has impacted the market.
Meanwhile, the Capacity Market T-1 2023/2024 auction cleared at £60.00/kW, the second highest price in history with 5.8 GW worth of secured contracts. Notably, 600MW of the 1GW of battery storage projects that prequalified for the auction secured contracts. This represents double the quantity secured in the previous year’s T-1 auction.
Article co-authored by Shriya Lakhani, Trainee Solicitor at CMS