Consultation outcome

Open letter on new technologies in the Capacity Market

Updated 27 November 2020

This was published under the 2019 to 2022 Johnson Conservative government

Dear stakeholder

Rule 2.4 of the Capacity Market Rules requires the Secretary of State to consult with stakeholders as to whether any new generating technologies which are capable of contributing to security of supply, and which are not already identified as a Generating Technology Class, should be eligible to participate in future Capacity Market auctions.

In February 2020, as part of our consultation on future improvements to the Capacity Market ^{[footnote 1]}, we asked stakeholders whether they could identify any new technologies which would be suitable for inclusion in the scheme. The large majority could not identify any such technologies. A few suggestions were made, such as co-located projects and hydropower capacity (tidal, wave and ocean currents). It was not deemed necessary to include any new technologies in the Capacity Market, ahead of this consultation, as a result of the February 2020 consultation.

Regarding hydropower, there is already an appropriate Generating Technology Class (Hydro), although this does not currently include tidal flow, waves, ocean currents and geothermal hydropower. We are open to expanding this Generating Technology Class to include these sub-categories in the future, if requested by the developers of such projects and/or if there is sufficient evidence provided in response to this open letter or future open letters consulting on the addition of new technologies to the Capacity Market.

Regarding co-located projects (also known as hybrid Capacity Market Units), this topic was raised in the 2019 consultation on further technical amendments to the Capacity Market ^{[footnote 2]}. We asked if the existing approach to enabling the participation of co-located projects in the Capacity Market (including the approach to de-rating) was appropriate. All but one of the 26 responses felt the existing approach was appropriate. Given the clear satisfaction with the current methodologies, we did not believe it was necessary to include co-located projects as a new Generating Technology Class at that time. We would welcome views on co-located projects in response to this open letter.

We are now providing an opportunity for stakeholders to inform us of any new generating technologies which are capable of contributing to security of supply and may be suitable for inclusion in the Capacity Market.

Please respond with details of the technology and evidence of its contributions to security of supply to energy.security@beis.gov.uk by 11pm on 30 October 2020.

Some examples of the type of information that would support suggestions and aid our decision-making is provided below. Please note that this list is not exhaustive, and it is not necessary to provide all the information below in order for us to consider your suggestion. However, the more information we receive, the more likely we are to be able to make a clear decision. If authorised, we may get in touch with respondents to ask follow-up questions. Please include your contact details in your response if you are open to receiving follow up questions. Please also indicate in your response whether you would like us to treat your response as confidential.

• a brief description of the technology
• does the technology already exist, has it been deployed commercially at scale?
• is there any evidence to show that the technology is commercially viable e.g. a proven business model?
• is the technology able to contribute to security of supply at periods of peak electricity demand e.g. by generating electricity or reducing electricity demand?
• what evidence is there relating to the reliability and availability of this technology at periods of peak electricity demand?
• is the technology significantly different from existing Capacity Market generating technology classes to warrant its own class?
• what is the fuel source or source of energy for the technology? If fuelled, is it a fossil fuel?
• is the output of this technology fully controllable or is it dependent on an intermittent energy source?
• are there any limitations on the length of time the technology can operate continuously at full capacity during peak periods e.g. due to limitations on fuel / energy source or running hours? If so, what are the typical duration limits?
• contact details (for any follow up questions)

We will publish the outcome of the review by 1 December 2020, as required by Rule 2.4.1(b).

Best regards

The Capacity Market policy team

1. https://www.gov.uk/government/consultations/capacity-market-proposals-for-future-improvements ↩

2. https://www.gov.uk/government/consultations/capacity-market-further-technical-amendments ↩