DECC confirms capacity market reforms
DECC confirmed on Friday 6 May that it intended to bring forward the first capacity market delivery year to 2017-18. Responding to its earlier consultation on the proposal, the department said it was of the view that the earlier auction would have a less distortive impact and provide greater transparency than extending the use of the Contingency Balancing Reserve for a year. The response also confirmed DECC’s intention to purchase significantly more capacity––perhaps over 3GW more––than would otherwise have been the case in the next T-4 auction; it said it was confident that a “healthy pipeline” of gas projects were ready to take advantage of this opportunity. While a new round of capacity payments will result in costs of £28-38 being passed through to customer bills, DECC is confident that the impact on bills shall be outweighed by the lower price of electricity, resulting in an overall reduction of bills by £46 in 2018.