T-4 Capacity Auction provisional results: NESO awards over 43 GW for delivery year 2028/29

The T-4 capacity auction for the 2028/29 delivery year concluded with the allocation of 43,055 MW in capacity agreements.

The auction cleared at £60.00/kW/year, ensuring the medium-term security of the UK"s electricity supply.

According to National Energy System Operator Limited (NESO)'s provisional report, the auction successfully allocated 96.41% of the total capacity offered, with 669 Capacity Market Units (CMUs) awarded to 172 parent companies and 275 applicant companies. Existing generation technologies were the primary beneficiaries, although battery storage and demand-side response (DSR) showed continued growth.

The T-4 Capacity Auction is a key mechanism within the UK's Capacity Market, designed to ensure security of electricity supply in the long term.

Organised by the NESO, the auction secures commitments from power generators and demand-side resources four years in advance of delivery, providing financial incentives to maintain sufficient generation capacity during peak demand periods.

This mechanism plays a crucial role in balancing the grid, preventing shortages, and supporting the UK's energy transition by encouraging investment in low-carbon and flexible energy solutions.

The results highlight a strong reliance on conventional technologies, with gas-fired generation securing 63.34% (27,269 MW) of the total awarded capacity.

However, renewable energy sources and storage solutions continue to expand:

• Battery storage: 1,782 MW awarded, with contracts lasting up to 15 years.
• Hydropower: 1,264 MW allocated, reinforcing its role as a reliable backup source.
• Onshore and offshore wind: 124 MW combined, indicating a relatively low share in this auction.
• Nuclear: 927 MW awarded, ensuring long-term stability.
• Interconnectors: 6,833 MW secured, highlighting the increasing importance of imported energy.

Alongside the T-4 auction results, Ofgem has announced new eligibility criteria for its Long-Duration Energy Storage (LDES) support scheme, which aims to enhance grid stability with storage assets capable of discharging power for extended periods.

The LDES support programme will apply to storage technologies with a minimum discharge duration of eight hours, an increase from the previously proposed six hours.

Additionally, the first round of applications, set to open in April 2025, will target established technologies such as lithium-ion batteries with a minimum capacity of 100 MW.

A second application round will be open to emerging technologies such as flow batteries, compressed air, and liquid air storage, with a minimum capacity of 50 MW.

This initiative aligns with the UK"s broader energy security strategy, ensuring that storage assets can support the grid during periods of low renewable generation.

The new scheme could also impact future T-4 auctions, potentially increasing the share of LDES technologies in upcoming capacity agreements.

NESO"s report reveals stability in total awarded capacity across previous T-4 auctions, with notable shifts in technology distribution.

Compared to the T-4 auction for delivery year 2027/28, the following trends emerged:

• A rise in battery storage participation, increasing from 3.8% to 4.14% of the awarded capacity.
• A slight reduction in the proportion of gas-fired generation, reflecting a gradual transition towards cleaner technologies.
• An increase in demand-side response (DSR) agreements, reaching 1,767 MW awarded.

The clearing price of £60/kW/year represents a competitive level compared to previous auctions.

This price incentivises investment in generation and storage projects, ensuring financial stability for system operators.

"The clearing price reflects market needs and supply security for the coming years," the NESO report states.

Among the most significant projects awarded capacity agreements in the T-4 auction 2024 for delivery year 2028/29, the following stand out:

• Centrica Plc: awarded 9,779 MW in battery storage capacity.
• EDF Energy: secured 927 MW in nuclear capacity.
• Intergen Power Ltd.: obtained 727 MW in gas-fired generation.
• Greenlink Interconnector Trading Limited: secured 272 MW for a new interconnector.

These allocations reinforce the UK"s commitment to diversifying its energy mix, balancing conventional and emerging technologies.

The T-4 capacity auction results for 2028/29 confirm that gas remains the dominant energy source in the UK's capacity market.

However, battery storage and demand-side response are steadily increasing their share.

NESO continues to drive a long-term security strategy, ensuring contracts for a broad mix of technologies, with a notable presence of interconnectors and renewable generation.

Additionally, the new LDES programme could shape future capacity auctions, encouraging longer-duration storage technologies to compete alongside conventional and short-duration battery storage solutions.

As the market evolves, future auctions could shift further towards cleaner technologies, depending on policy incentives and regulatory support for the UK's energy transition.

T-4 (DY 2028/29) Provisional Auction Results Report: