UK pushes forward with peak demand auctions despite DSR benefits


The UK’s National Electricity Grid Operator (ESO) has announced the date of the next Capacity Market auction for the country, to take place in June 2019.

The T1-level auction, already postponed from January, will take place between 11 and 12 June 2019.

The auction serves to procure the capacity needed for peak demand management, through a series of auctions typically held a year in advance, but was postponed indefinitely following a European Court of Justice ruling in November 2018.

The ruling came as a result of a legal challenge by Tempus Energy, which argued that the current procurement process of securing peak demand capacity gives unfair advantage to fossil fuel power plants over demand-side response (DSR) technologies that they say are cheaper and more reliable.

Under the current scheme, fossil fuel generators are offered financial incentive to remain on standby to provide additional peak demand power when required.

The revision of the date has been motivated by the country’s Energy Secretary Greg Clark, stressing that the auction be rearranged as “as soon as reasonably practicable”.

Mr Clark’s letter also instructs the UK ESO to allow pre-qualified Capacity Market Unit (CMUs) to withdraw from the 2019/2020 delivery year auction without penalty.

Do you agree with the move? Are you interested in understanding how the auction system may benefit certain parties? You’ll love this 2-minute read.