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Understanding the UK Capacity Market

What is the Capacity Market?

The UK Capacity Market is a mechanism designed to ensure security of electricity supply by providing payments to reliable forms of capacity - both demand reduction and electricity generation - to be available when needed.

Key Objectives

  • Security of Supply: Ensuring adequate electricity capacity during peak demand periods
  • Market Stability: Providing revenue certainty for generators and demand response providers
  • Cost Efficiency: Delivering security at the lowest cost to consumers
  • Technology Neutral: Open to all forms of capacity including storage, demand response, and generation

How Capacity Market Auctions Work

The capacity market operates through competitive auctions where providers bid to supply capacity. There are two main types of auctions:

T-4 Auctions (Four Years Ahead)

These are the main auctions held four years before the delivery year, allowing time for new capacity to be built. T-4 auctions typically secure the majority of required capacity.

T-1 Auctions (One Year Ahead)

These fine-tuning auctions are held one year before delivery to account for changes in demand forecasts and capacity availability since the T-4 auction.

Secondary Trading

After the auctions, capacity obligations can be bought and sold through secondary trading. This allows providers to manage their positions, handle outages, or enables new market entrants to acquire capacity without waiting for the next auction.

Our platform provides both educational resources and a live trading marketplace:

Capacity Market Participants

Capacity Market Timeline

The capacity market has evolved significantly since its introduction:

  • 2013: Capacity market legislation introduced
  • 2014: First T-4 auction for delivery year 2018/19
  • 2016: First T-1 auction
  • 2018: Market suspended following EU state aid ruling
  • 2019: Market resumed with EU approval
  • 2021: Post-Brexit arrangements confirmed

Current Market Status (2024-2028)

The current capacity market covers delivery years from 2024-25 to 2027-28, with over 40,000 MW of capacity secured across various technologies. Key trends include:

Secondary Trading Marketplace

Beyond the initial auctions, capacity obligations can be traded in the secondary market. Our platform provides comprehensive secondary trading resources:

πŸ”„ Live Trading Board

Our Secondary Trading Board is an active marketplace where capacity providers can:

  • Post Sale Adverts: Offer capacity obligations for sale with flexible pricing options
  • Post Purchase Requests: Advertise capacity requirements and desired terms
  • Browse Active Listings: View all current buy and sell opportunities
  • Direct Messaging: Contact counterparties directly through our secure messaging system
πŸ’‘ Trading Board Features
  • Flexible Capacity: Indicate if your capacity amount is negotiable
  • Price Options: Set specific Β£/kW/year prices or "POA" (Price on Application)
  • Multiple Delivery Years: Trade capacity for 2025, 2026, 2027, and future years
  • Privacy Controls: Choose whether to display your contact email publicly
  • Professional Service: Β£5 fee ensures serious participants and maintains quality

πŸ“– Educational Resources

Understanding secondary trading is crucial for effective participation. Our Secondary Trading Guide covers:

  • Three Trading Phases: From post-auction strategic positioning to live delivery year trading
  • Common Pitfalls: Avoid costly mistakes with timing, due diligence, and documentation
  • Market Dynamics: Understanding pricing, penalty caps, and payment adjustments
  • Regulatory Requirements: EMR portal registration and compliance essentials

Explore the Data

Use our interactive tools to explore capacity market data:

  • Map Explorer - Interactive map with advanced filtering for exploring all capacity market assets by location, technology, and company
  • Search Components - Search and filter capacity market components with integrated map visualization
  • Secondary Trading Board - Live marketplace for secondary trading of capacity obligations
Key Statistics

Total Capacity: Over 40 GW secured

Technologies: 15+ different types

Companies: Hundreds of participants

Locations: Across England, Scotland & Wales