GB Capacity Market T-1 Auction: Results Review

GB Capacity Market T-1 Auction: Results Review 

Key takeaways from the T-1 Auction: 

• A total of 16.3GW (9.6GW de-rated) capacity had opted-in & prequalified in the T-1 auction for delivery year 2025-26, against a target of 7.5GW. 

• The gap between opted-in & prequalified capacity and the target was wider (2.1GW vs 1.8 GW) than last year which saw a clearing price of £35.79/kW/yr after tighter auctions with clearing prices of £60/kW/yr, £75/kW/yr and £45/kW/yr  seen in the preceding three years.  Prior to those years, all T-1 auctions had cleared in a range between £1/kW/yr and £7.95/kW/yr. 

• All 3.6GW of de-rated nuclear capacity that entered the auction secured a T-1 contract, which is the highest of any T-1 auction to date.  

• 2.4GW of gas-fired capacity were awarded contracts, 1.8 GW came from combined cycle gas turbine (CCGT) spread across 3 assets: Medway (668MW), Severn Power (387MW) and Sutton Bridge (773MW). Combined heat and power (CHP) was the second largest contributor with 265MW of de-rated capacity, closely followed by 200MW OCGT then >100MW of reciprocating engines. 

• 1.2GW of de-rated capacity did not secure a contract with Severn Power CCGT only securing contracts for half of their 774MW gas-fired capacity. 

• 725MW of de-rated battery storage capacity secured contracts with 77% of that being awarded to new-build assets. 

• Greenlink, the latest interconnector cable between GB and I-SEM won a 1-year contract for 247MW of de-rated capacity.  

Montel Energy's Jake Thompson sets out further analysis of the units that secured contracts with breakdowns by technology and qualification status.  

Capacity Market auctions 

The GB Capacity Market is a mechanism introduced by the government in 2014 to ensure continued security of supply as more volatile and unpredictable renewable generation assets come on stream. During the delivery year, capacity providers will receive payments for their agreed obligations at the auction clearing price profiled monthly. Providers are expected to be available to respond with their agreed generation volumes or load reductions for delivery periods of 4 hours when called on by National Grid Electricity System Operator at times of system stress. 

The auctions start at the Price Cap of £75/kW/yr and have a £5/kW/yr price decrement separating the round cap and round floor in each round of the auction until the auction clears. The minimum price specified by the Applicant at which they would seek an agreement is known in the auction as an Exit Bid. Price Makers can submit Exit Bids at any price in the Auction, Price Takers can only submit exit bids that are equal to or below the Price Taker Threshold which is currently set at £25/kW/year. 

Target capacity for  2025/26 T-1 auction 

From the ~9.6GW of de-rated capacity that entered this year's auction, ~7.9GW secured contracts against a target of ~7.7GW1.  The T-1 Capacity Market Auction for delivery year 2025/26 concluded after eleven rounds of bidding with a clearing price of £20.00/kW/year. The auction revealed a 2.1GW gap between opted-in and prequalified capacity and the target capacity, which was 0.3GW larger than the previous T-1 auction (1.8GW), which cleared at £35.79/kW/year.  

Nuclear units 

Nuclear comprised 3.6GW (45.9%) of all awarded capacity in this year auction, closely followed by 2.4GW of gas and then 725MW of battery storage. All 3.6GW of de-rated nuclear capacity that entered secured a T-1 contract, which is the highest of any T-1 auction to date. Nuclear comprised >45% of total awarded de-rated capacity. The rise is attributable to two factors: (i) additional units at Torness 1 and 2 and Heysham 2 entering the auction (these units, except for Torness 1, had previously participated in and secured contracts from T-4 auctions up to 2023/24 [] delivery year); (ii) and lifetime extensions to the nuclear fleet with the most recent extension announced by EDF in December 2024 confirmed Heysham 1 and Hartlepool that were originally planned to begin defueling in 2026, and Heysham 2 and Torness in 2028 are now scheduled to stay online until 2027 and 2030, respectively.  The latest extensions do not extend far enough to cover the next T-4 auction for the 2029/30 delivery year, as they overlap with the current scheduled defueling periods. 

Gas-fired units 

2.4GW of gas-fired capacity were awarded contracts, a decrease from the 2.9GW awarded in the previous year. The Calon units, Sutton Bridge and Severn Power, entered 1.5GW of de-rated capacity into this T-1 auction. Sutton Bridge (de-rated 773MW) successfully secured a T-1 contract. Severn power entered with two 387MW gas-fired assets with only one securing a contract. In last year’s T-1, both Severn Power and Sutton bridge exited in round 8 causing the auction to clear in that round, resulting in the assets not procuring contracts. Severn Power made up 32% of the total capacity that did not secure a contract. 

From the 2.4GW of awarded gas capacity, 1.8 GW came from combined cycle gas turbine (CCGT) equating to 77 % of total award gas-fired capacity. This was spread across 3 assets: Medway (668MW), Severn Power (387MW) and Sutton Bridge (773MW). Combined heat and power (CHP) was the second largest contributor with 265MW of de-rated capacity spread across >35 assets, closely followed by 200MW OCGT then >100MW of reciprocating engines. 

Battery Energy Storage System (BESS) units 

725MW of de-rated battery capacity secured a capacity market contract in this years T-1 auction. 77% of the awarded capacity for battery storage was comprised of new-build assets. De-rating factors for 1 - 2hr battery storage have increased by 18% on average, meaning BESS assets will be paid more per unit of de-rated capacity compared to last years T-1 auction.  

Interconnectors 

Greenlink had entered with a nominal capacity of 500MW (247MW derated) has secured a 1 year T-1 contract. 

The auction results highlight shifts in energy capacity, with nuclear dominance, gas reductions, and increasing battery storage, shaping future energy security.