UK's T4 capacity market for 2021/22 sees coal generation retreat in full flood

London (Platts)--9 Feb 2018 602 am EST/1102 GMT

Around 7 GW of coal-fired generation capacity failed to win agreements in Thursday's T-4 capacity market auction for delivery 2021/22, National Grid data showed Friday.

The failures could prove terminal for plants ahead of tougher air quality standards from 2021, and a complete coal phase-out date of 2025 set by the UK government.

The auction cleared at GBP8.40/kW/year ($11.73/kW/year), with provisional agreements for 50.41 GW, National Grid data showed Friday.

Agreements went 86% (43.3 GW) to existing generation, 762 MW to new build generation and 2.155 GW to new build interconnection.

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Existing interconnection (2.4 GW) and demand response (1.2 GW, almost all unproven) made up the balance.

Natural gas dominated by fuel type, cornering 29.6 MW of agreements, followed by nuclear with 7.9 GW.

Just 2.565 GW of coal won through across two sites, with agreements for three of four 500 MW units at Uniper's Ratcliffe-on-Soar plant and for two units at Drax (560 MW and 650 MW).

Over 11 GW of CCGT capacity dropped out before the auction cleared, as did 7.66 GW of coal/biomass, over 2 GW of gas open cycle and reciprocating engines and 949 MW of storage.

RWE's Aberthaw coal plant (1.5 GW) failed to win an agreement, as did EDF's Cottam (1.75 GW) and West Burton A (1.7 GW) coal plants. Fiddler's Ferry (SSE, 1.9 GW) also failed to win a contract.

Of gas plant, Corby Power failed to win an agreement, as did Centrica units at Brigg (OCGT) and Barry (CCGT).

New interconnection agreements went to ElecLink (690 MW), IFA2 (715 MW) and Nemo Link (750 MW).

The auction closed in a fourteenth round of bidding.

The clearing price is by some way the lowest seen in a UK four year-ahead auction to date.

December 2016's T-4 auction cleared at GBP22.5/kW/yr for 2020/21 capacity, while December 2015's cleared at GBP18/kW/yr for 2019/20 capacity.

--Henry Edwardes-Evans,
--Edited by James Leech,

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