UK National Energy System Operator Procures 40.1 GW in T-4 Capacity Market Auction

UK National Energy System Operator Procures 40.1 GW in T-4 Capacity Market Auction; Energy Storage Projects Secure ~6.4% Share

 

 

 

On March 10, the UK National Energy System Operator (ESO) announced the results of its T-4 Capacity Market auction for delivery in the 2029/30 year. The auction procured a total of 40,108.608 megawatts (MW) in capacity obligations, exceeding the target of 39,400 MW. The clearing price for this auction was £27.10 per kilowatt per year-a decline of over 50% compared to the £60 price set in the previous year's auction.

Gas-fired projects secured 58.5% of the awarded capacity, while interconnector projects won 19.5%. Battery energy storage system (BESS) projects secured 1,224 MW of capacity obligations, accounting for 3.05% of the total capacity; pumped hydro storage projects secured 1,352 MW, accounting for 3.337%. Combined, these two storage categories represent approximately 6.4% of the total awarded capacity.

How does battery energy storage work in this context? These systems charge during periods of excess generation (often from renewables) and discharge during peak demand, providing flexible capacity that helps balance the grid. Different technologies are gaining traction, including energy storage flow battery solutions known for their long-duration capabilities and scalability in utility applications, as well as lithium battery for solar energy storage deployments that pair effectively with intermittent solar PV to store daytime generation for evening use.

Application and modeling of battery energy storage in power systems continues to evolve, enabling more accurate forecasting of revenue streams and grid support services. BLOO POWER and other forward-thinking operators are actively exploring these advanced modeling techniques to optimize project performance. Several owner-operators-including Grenergy, Gresham House, Amp Clean Energy, Eku Energy, European Energy, and Harmony Energy-successfully secured contracts for their battery storage assets.

The Capacity Market typically constitutes only a small fraction of the revenue generated by battery energy storage projects. Different technologies are subject to varying "de-rating factors"; this percentage limits the nominal (nameplate) MW capacity that a project is permitted to bid into the auction. Typically, gas and nuclear power assets are assigned the highest de-rating factors, while energy storage assets receive lower factors, and solar PV assets receive very low factors. Solar PV projects secured only 13 MW, representing a mere 0.03% of the total. Other major winning technologies included run-of-river hydropower (3.06%), demand-side response (6.4%), and nuclear power (2.3%).