Capacity Market: proposals to maintain security of supply and enable flexible capacity to decarbonise

The security of our electricity supply is key to successful delivery of the Clean Energy Superpower Mission and one of its key pillars - clean power by 2030.

Achieving Clean Power by 2030 means we will rely even more on renewable power. The variable nature of renewables makes it critical that we have sufficient flexible capacity that can be ramped up quickly when renewable generation is low, such as on dark, still days.   

The government is already investing in low carbon flexible technologies to ensure we have the energy flexibility our country needs. Whilst these technologies scale up, we will rely on gas as the main mature, reliable technology capable of providing the flexibility we need during the transition period. Our aim is to move unabated gas into a backup role, primarily to ensure security of supply. 

We are therefore seeking views on a series of changes to the CM that aim to retain sufficient flexible capacity on the system and strengthen security of supply, while also supporting the decarbonisation of unabated gas. We propose:

• making it easier for plants to access multi-year CM agreements, providing greater revenue certainty and encouraging the type of investment ageing plants need to extend the operating life of the plant. This is important to mitigate short-term risks to electricity security

• providing assurance that all substantially refurbishing or new combustion power plants participating in the next CM auction have a credible plan to decarbonise before they become operational, either through converting to hydrogen firing or carbon capture  

• introducing a pathway for unabated gas plants with multi-year CM agreements to exit the CM and transfer to the Dispatchable Power Agreement, enabling decarbonisation through conversion to power carbon capture, usage and storage (CCUS)

We are simultaneously running a CM call for evidence on proposals to maintain security of supply and enable flexible capacity to decarbonise. This will inform future changes to the CM that are also intended to support investment in, and decarbonisation of, flexible capacity.

We encourage respondents to review both the consultation and the call for evidence in tandem, and respond to both using the online response form.

We strongly encourage respondents to respond online wherever possible.

If you do choose to respond via email or in writing, then to ensure your views are most effectively used in policy development please respond directly to the individual questions posed, supported by evidence where possible. When responding, please state whether you are responding as an individual or representing the views of an organisation.

The consultation is open to anyone to respond, but will be of particular interest to:

• energy industry
• consumer groups
• academia
• think tanks
• other organisations who have an interest in security of supply and decarbonisation

Read our consultation privacy notice.