The Capacity Market was introduced in 2014 as part of the Electricity Market Reform programme to ensure the future security of our electricity supply. Energy generation and/or storage providers are paid to ensure they’re available to meet the demands of the electricity grid when there is a high risk that available supply of energy would be lower than demand.
Potential participants in the capacity market enter into an auction to secure an agreement. There are usually two capacity auctions each year:
- T-4 – is the main auction. This auction secures the majority of the capacity required four years from the auction date. This year, the auction date is 11th March.
- T-1 – these are additional auctions that are run in order to secure additional capacity just ahead of each delivery year. This year, the auction date is 4th March.
Capacity Market Units (CMUs) that are awarded a Capacity Market Agreement must demonstrate that they will be able to supply energy when required of them in their agreed delivery year. During the construction of the CMU this is evidenced through the submission of Independent Technical Expertise (ITE) Reports.
- Financial Commitment Milestone (FCM) reports show that the provider of a CMU is financially committed to deliver the project. To meet FCM, 10% of the planned Capital Expenditure needs to have been incurred and a Final Investment Decision has to have taken place.
- Substantial Completion Milestone (SCM) reports show that the provider of the CMU can deliver 90% of the obligation outlined in their agreement. The reports also demonstrate that the CMU has been commissioned and is operational. If 90% cannot be achieved then the ITE may be able to demonstrate that the CMU has met Minimum Completion Requirements (MCR), as an interim step.
- Extended Years Criteria (EYC) Any CMU that has been awarded a Capacity Agreement with a duration of more than three Delivery Years must also provide an EYC report to demonstrate a minimum development spend value per kW of capacity has been achieved, and demonstrate that the system has been specified to last the lifetime of the agreement.
The required ITE reports have different deadlines spread out across the year.
- FCM: For T-1 agreements, an FCM report must be submitted within 3 months of the auction results date. For T-4 agreements the deadline is within 16 months of the auction results date, however, an increase in Credit Cover is required if the FCM is not submitted within 11 months of the auction results date. In 2025 these dates will be 4th June for T-1 agreements and 4th July for most T-4 Agreements issued in 2022
- SCM: For T-1 agreements, an SCM report must be submitted by the start of the delivery year, and for T-4, by the long stop date specified in the agreement. This is usually the 1st of October of the delivery year.
- EYC: EYC reports must be submitted no later than 3 months after the delivery year start (1st Jan) or when the SCM is met, if it’s met after 1st Jan.
TNEI can deliver Financial Commitment Milestone reports, Substantial Completion Milestone reports and Extended Years Criteria reports, as well as supporting documentation in the event of construction delays or when a CMU only meets the Minimum Completion Requirements.
As some of the above deadlines can be deferred or extended, TNEI cannot advise on reporting deadlines for specific CMUs, however, you should be able to see all ITE report deadlines by logging into the EMRDB Portal for your particular CMU.
As an independently owned consultancy with significant experience in the energy industry across all technology types, TNEI is ideally placed to deliver the ITE role for your CMU. Please contact us if you want to find out how we can act as ITE on your project or wish to discuss any other aspects of your CMU.
