UK Energy Storage Projects Secure 576 MW Of Capacity in T-1 Capacity Market Auction

UK Energy Storage Projects Secure 576 MW of Capacity in T-1 Capacity Market Auction at Record Low Settlement Price

 

Provisional results released by UK grid operator NESO show that battery energy storage systems UK secured contracts for 576 MW of capacity in the T-1 capacity market auction for delivery in 2026-2027, representing 8% of the total capacity awarded in this auction. This highlights the growing role of energy arbitrage battery storage, where systems charge during periods of low or negative electricity prices (often from excess renewables) and discharge during peak demand to capitalize on price differences for revenue.The auction awarded a total of 7.2 GW of capacity agreements at a settlement price of £5 per kW per year, the lowest price level for T-1 auctions since 2020. The awarded capacity is distributed across 195 capacity market units, with 51 units listed as "storage-battery" as the primary fuel type.

 

 

A how battery energy storage system works is relatively straightforward: these systems, often using lithium-ion technology, store electrical energy in batteries via a bi-directional inverter and battery management system (BMS). They charge from the grid or renewables when supply exceeds demand, then discharge to provide power back to the grid or users when needed, enabling grid stability, peak shaving, and services like frequency response.While most large-scale UK projects favor advanced lithium-ion chemistries for higher efficiency and cycle life, older or smaller setups may still incorporate lead acid battery energy storage system options due to their lower upfront cost, though they generally offer lower energy density and shorter lifespan compared to modern alternatives.

 

The T-1 auction provided NESO with an opportunity to fill capacity gaps not covered by previous T-4 auction contracts. For 2026-2027, the 7.2 GW of capacity secured in this T-1 auction complements the 50.7 GW of capacity already awarded in the previous T-4 auction. Consultants at consultancy LCP Delta stated that much of the new capacity seeking contracts in the T-1 auctions may have already secured capacity agreements for the following year through the T-4 auctions, but was able to come online earlier. Demand-side response assets also performed well, securing 662 MW of capacity. Nuclear power secured the most capacity in this auction thanks to EDF's decision to extend the lifespan of its Hartlepool and Heysham power plants to 2028.

 

Clearance prices for UK T-1 auctions have trended downward over the past five years, from £45 per kW per year for the 2021-2022 delivery year to £20 per kW per year for the 2025-2026 delivery year. In contrast, T-4 auctions, due to their much larger procurement volumes, should experience less price volatility. The T-4 auctions, targeting 39.4 GW of capacity for 2029-2030 delivery, will offer multi-year contracts, providing future revenue guarantees for battery storage project financing-including innovative solutions from providers like BLOO POWER, which specializes in scalable lithium-based home and commercial energy storage systems for solar integration and reliable power supply.

 

The results of this T-1 auction are provisional and will be finalized after an eight-working-day post-auction phase and government approval.