On 11 August 2017 National Grid published Auction Guidelines for the forthcoming T-1 and T-4 Capacity Market auctions, which will both take place in early 2018.

The Guidelines set out the key dates for both auctions, and provide an overview of the information applicants need to provide in their prequalification application. De-rating factors are also provided for each technology class.

National Grid is targeting 50.1GW of capacity for the T-4 auction and 6GW for the T-1 auction. For new build facilities hoping to secure a 15 year agreement, the minimum capital expenditure investment threshold per kW is £260/kW – a slight increase from the previous T-4 auction when the 15 years threshold was £255/kW.

Key dates

Applicants that wish to bid into either (or both of) the forthcoming Capacity Market auctions should note the following key dates:

Event

T-1

T-4

Prequalification Window opened

24/07/2017

24/07/2017

Prequalification Window closes

29/09/2017

29/09/2017

Prequalification Results Day

10/11/2017

10/11/2017

Notification of Prequalified CMUs

9/1/2018

16/1/2018

Notification of updated Auction Parameters and confirmation of the conditional Prequalified Applicants

9/1/2018

16/1/2018

Confirmation of Entry

9/1/2018 to 16/1/2018

16/1/2018 to 23/1/2018

Mock Auction

18/1/2018

25/1/2018

Auction start

30/1/2018

6/2/2018

De-rating factors – energy storage

Battery storage developers will note the guidance gives a de-rating factor of 96.11% for CMUs that fall within the Storage technology class. This is based on National Grid's application of the current de-rating rules.

However, in light of the government's proposals to change the de-rating methodology for energy storage, we would advise battery developers to treat these figures with caution.

As we reported here, the government proposes scaling the de-rating factors for batteries according to how long they can discharge at full capacity, which means assets with limited duration would receive a lower de-rating factor.

Crucially, the government has made it clear that it intends to implement the new de-rating methodology before the forthcoming Capacity Market auctions.

The new de-rating proposals remain subject to an ongoing consultation, which closes on 8 September 2017. As there has been considerable opposition to the proposals within the industry, we recommend that battery storage developers continue to watch this space closely.