T-3 Capacity Auction – Provisional Results

The provisional results of the T-3 capacity auction in Great Britain have been announced. SSE has secured capacity contracts for 2,790MW* of electricity generation capacity, although its Medway, Keadby 1 and Keadby 2 stations have not secured contracts on this occasion.

In total, 45.1GW of capacity contracts have been awarded to capacity providers at an auction clearing price of £6.44/kW. This auction relates to the capacity year 2022/23, which runs from 1 October 2022 to 30 September 2023.

SSE has secured capacity contracts for 2,790MW, which comprises:

  • 888.5MW of hydro-electric and pumped storage capacity.
  • 1,901.5MW of gas-fired and embedded capacity.

The following capacity, which prequalified for the auction, did not secure an agreement:

  • Medway CCGT Power Station - 661.5MW
  • Keadby 1 CCGT Power Station - 716MW
  • Keadby 2 CCGT Power Station (new-build) - 804MW
  • 133MW of smaller embedded generation assets and DSR units

SSE’s Keadby 2 CCGT, which is currently under construction in North Lincolnshire, has not secured a capacity contract. When completed in 2022, Keadby 2 will be the cleanest and most efficient gas-fired power station in Europe, displacing older generation technologies and playing a key role in the transition to net zero. SSE remains fully committed to the project and the station will have a further opportunity to secure a 15-year contract in the upcoming T-4 auction in March.

This outcome will not impact operations at SSE’s existing Medway and Keadby 1 stations, which both currently have capacity contracts in place until September 2022, and will have opportunities to secure further agreements in future auctions.

The total value secured by SSE in this T-3 auction is around £18m, which will be received on a pro-rated basis throughout the delivery year. To secure the revenue arising from the capacity market, generators must produce electricity or reduce demand when the system requires; failure to do so will result in penalties being levied.

Martin Pibworth, SSE’s Energy Director, said:

“While our Medway, Keadby 1 and Keadby 2 stations have not been awarded capacity contracts in this T-3 auction, this will not impact our existing operations and we will have further opportunities to secure contracts in future auctions.

“SSE believes that super-efficient and flexible gas-fired generation is crucial in the transition to net zero as it complements increasing levels of renewables on the system and helps to ensure security of supply for customers.”

The provisional results are subject to confirmation by the Secretary of State for Business, Energy and Industrial Strategy (BEIS).

*A de-rating factor is applied to each station according to rules set by the UK Government.