The T-4 2022 auction for delivery in 2025/26 (T-4 auction) concluded on 22 February 2022.

In collaboration with LCP, we have prepared an article that provides our reflections on the results of the T-4 auction.

We explore some particular features of the T-4 auction in the article, which include:

• Reasons for the all-time record clearing price (£30.59/kW-year), significantly above the next highest price (£22.50kW-year), in T-4 2016 auction for delivery in 2020/21. The high clearing pricing follows the T-1 auction for delivery in 2022/23 held a week earlier that cleared at the price cap of £75.00/kW-year.
• The winners and losers of the auction, looking in particular at:
  • The contrast in fortunes for some existing generators, with an increase in existing CCGT capacity clearing at the auction, and a decline of nuclear capacity participating; and
  • The rapid increase of battery storage participation, with de-rated capacity quadrupling compared to the previous year’s auction.
• The drivers of the record clearing price, which can be divided into:
  • Estimates of higher peak demand and amendment to the methodology driving higher target capacity in the auction; and
  • A smaller amount of existing and new build capacity pre-qualifying for and participating in the auction.
• Evidence of the energy transition impacting the Capacity Market, where we focus on:
  • The future incentives for gas-fired capacity, particularly in light of no new CCGT plants clearing the auction despite the higher clearing price; and
  • The different types of battery storage participating in the auction, and the potential for other types of electricity storage (including longer duration storage) to participate in the future.  

To read further about our work with LCP, please view the full report.

On Tuesday 27 April we will be hosting a webinar alongside LCP on the topic of  long-duration storage in the GB electricity market. You can find out more and register here.