Review looks at opening capacity market to renewables

The government has kick-started moves to open up electricity capacity market auctions to solar and wind generation.

A review of the capacity market, which was set up in 2014 to ensure the UK has sufficient security of supply, was published by the Business, Energy and Industrial Strategy (BEIS) Department yesterday as part of its broader EMR (Electricity Market Reform) process.

The call for evidence document says the review will consider whether unsubsidised renewables, such as wind and solar, should be allowed to participate in the next capacity market auction in the winter of 2019/20.

Renewables have traditionally been denied access to the market due to concerns about the intermittent nature of the electricity they generate.

But the document says there are ‘good reasons to allow wind, and potentially solar, to participate’ in the market because it will increase competition and potentially improve value for money.

It states that the eligibility framework for the market will have to be tweaked to allow renewables projects, currently supported through the Renewable Obligation, to participate when these subsidies run out in 2027.

The document says that legislative changes may be required to facilitate access to the capacity market by hybrid projects using a mix of technologies, such as combined solar and battery.

The document also shows that the government is looking at whether the de-rating of interconnectors, which measures how reliable particular technologies are, should be cut.

It is conducting this work in response to concerns that as the energy system becomes more reliant on renewables, different countries may experience correlated fluctuations in output such as when wind speeds are low.

The contribution that interconnectors make to security of supply will be examined because of the risk they may be ‘double committed’ during periods of energy stress.

But overall the review concludes that the market is’ broadly working as intended’ and does not currently require ‘fundamental change’.

Frank Gordon, policy manager at the Renewable Energy Association, welcomed the government’s move to end the exclusion of wind and solar from the capacity market which has overwhelmingly provided support for fossil fuel supply.

He said: “As we have consistently said, the problem with the Capacity Market is that it fails to tackle all elements of the ‘Energy Trilemma’ – completely ignoring both value for money and decarbonisation – unlike the remaining renewable support schemes which tackle all elements.

“We encourage the government to examine how renewables can be included in future auction rounds as soon as possible, as well as to address the current barriers that make it more difficult for energy storage projects to compete.”