GB Capacity Market Pre-Qualification: Capacity Floods the T-4 Auction

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(s), 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 when called on by National Grid at times of system stress. In the T-4 auction, potential Capacity Market participants can bid for contracts in auctions held four years ahead of the delivery year. By contrast, to the T-1 auction, in the T-4 auction, multi-year agreements can be awarded up to 15 years in length for units that meet applicable capital expenditure thresholds3.

The auctions follow a descending clock format, starting 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.

On 11th December 2025, the National Energy System Operator (NESO) released the registers detailing the prequalification status of every unit that applied to take part in two capacity market auctions scheduled to be held in Q1 2026.

Key parameters of the capacity market auctions:

• T-4 Auction: Scheduled for the delivery year 2029-30 with a target capacity of 39.1GW.

• T-1 Auction: Scheduled for the delivery year 2026-27 with a target capacity of 5.8GW.

GB capacity market T-4 prequalification: key takeaways 

This year’s auction introduces CM contracts of up to 3 years for Declared Low Carbon CMUs with zero CapEx (£0/kW) and up to 9 years for those whose £/kW CapEx is above the threshold of £205/kW, set at the midpoint for the non-Declared Low Carbon CMUs.

For the 2029/30 T-4 CM auction, 76.3GW nominal capacity (50.4GW derated) has either prequalified or conditionally prequalified, against a target of 39.1GW. The gap between the prequalified capacity and the target is much wider in this year’s T-4 auction compared to the last year’s 2028/29 T-4 which saw just 45GW of derated capacity which had either prequalified or conditionally prequalified against a target of 44GW.

The 2028/29 T-4 cleared at a high price of £60/kW/yr. Although lower than the previous two years, auctions which cleared at £65/kW/yr and £63/kW/yr in 2027/28 and 2026/27 delivery years, respectively, the price is still very high by historical standards when compared with years prior to those. Assuming all prequalified capacity (inc. conditional prequalified) confirm entry into the 2029/30 T-4 CM auction, we may expect to see more moderate clearing prices.

New Build Generating CMUs are eligible to set price above the “price-maker threshold” (£25/kW/yr) and secure multi-year contracts, whereas “Existing Generating CMU” units are, by default, “price-takers” and are therefore limited to setting exit bids either at or below this threshold and are limited to one-year contracts.

In total, ~9.4GW of derated capacity from new-build assets including batteries, DSR assets and gas-fired units are included in the schedule of prequalified units. 1.1GW of nominal capacity (1.0GW derated) of new-build capacity is gas-fired, spread across 14 units. KLCP CCGT, 540MW nominal capacity (490MW derated) is the largest of these new-build gas CMUs, which has conditionally prequalified. Battery Energy Storage Systems (BESS) are also on the rise. The 2029/30 T-4 CM auction sees the largest BESS capacity that has either prequalified or conditionally prequalified out of any T-4 auction. This equates to 22GW of nominal capacity (6.9GW derated).

Refurbishing Generating CMUs are eligible for multi-year contracts in the T-4 CM auction if the £/kW CapEx is above the allocated thresholds listed here: Full details of auction parameters and interconnector de-rating factors - GOV.UK. In total, 15.7GW of prequalifying nominal capacity (14.7GW derated) are a refurbishing gas-fired CMU. Amongst the largest units include Peterhead, Damhead Creek, and Didcot B5 with derated capacities of 1180MW, 812MW, and 761MW respectively.  

NeuConnect, the first cable connection between GB and Germany has prequalified in the T-4 auction for the second time. This interconnector had prequalified in the 2028/29 T-4 CM auction but did not confirm entry into the auction. Its nominal capacity of 1.4GW has been derated to 882MW, higher than the 840MW it was derated to in the previous T-4 auction. In total, interconnectors make 12.1GW (7.8GW derated) of the total 50.4GW derated capacity that prequalified and conditionally prequalified for the 2029/30 T-4 auction.

GB capacity market T-1 prequalification: key takeaways 

A total of 16.4GW (10.5GW derated) capacity has prequalified or conditionally prequalified for the T-1 auction for delivery year 2026-27 against a target of 5.8GW.

Of the total prequalifying capacity, ~3.6GW (derated) is comprised of nuclear assets and a further 2.9GW (derated) comes from DSR meaning 62% of the total derated capacity is comprised of two generation types in this year’s T-1 CM auction.

Nuclear capacity in continues its resurgence in T-1 auction. 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 September 2025 confirmed Heysham 1 and Hartlepool that were originally planned to begin defueling in 2027 now scheduled to stay online until 2028.  The latest extensions do not extend far enough to cover the T-4 auction for the 2029/30 delivery year, as they overlap with the current scheduled defueling periods.

The Calon units Sutton Bridge and Severn Power have prequalified for the 2026/27 T-1 auction. The Calon units, Sutton Bridge and Severn Power, entered last year’s T-1 auction for 2025/26 delivery with 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.

No interconnector capacity has entered this years T-1 auction. For the 2025/26 T-1 auction, Greenlink had entered with a nominal capacity of 500MW (247MW derated) has secured a 1-year T-1 contract. However, interconnectors are opting to participate in the T-4 CM auction and therefore no capacity has prequalified for the 2026/27 T-1 auction.