It's good news for low carbon response generation and storage, as data released by DECC shows that almost 5GW of fossil fuel generation capacity looks set to miss its implementation deadlines, paving the way for more new entrants into the capacity market in the impending auction process.
Despite imminent emissions curbs, diesel gen-sets are expected to still be popular, with Combined Cycle Gas Turbines and various storage technologies also likely to increase their share of the response market.
The REA comments that, with some small changes, the capacity market mechanism could have been a good catalyst for storage deployment. We are not necessarily convinced that longer term contracts are the answer in all cases - what is needed is flexibility for those with dispatch control over storage assets to play properly in different markets without being penalised with unfair charging. The capacity market can play one part in this, but failing to see the potential benefits of income layering could lead to a short-term perspective.
DECC’s data revealed that 5GW of conventional, fossil fuel powered generation suppliers that were awarded earlier contracts under the scheme have missed their targets for delivering the projects and therefore more capacity must be procured in the next auction rounds to cover the possible shortfall. The REA believes this is because of the increasing cost and difficulty of financing major new fossil fuel generation projects, in part due to low wholesale power prices and prolonged policy uncertainty. These difficulties serve to highlight the advantages of renewable generation, notably that they can be reliably and cost effectively delivered at scale in the time period required under capacity market rules. This serves to bolster our security of supply in the coming years.