The T-4 2020 auction for delivery in 2024/25 (T-4 auction) concluded on 10th March 2021.

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

Some key aspects explored in the bulletin include:

• Reasons underlying a higher clearing price (£18/kW-year) than that observed in the T-4 2019 auction (£15.40 per kW) and significantly above the T-3 auction held in early 2020 and the T-4 auction held in 2018 that both cleared at single digit levels (£6.44 per kW and £8.40 per kW, respectively).  
• Why the 40.8 GW of aggregate de-rated capacity procured in this auction, a little bit above the 40.1GW target, was again quite a bit lower compared to auctions held in previous years.
• The winners and losers in the auctions, looking in particular at:
  • Reduction in existing capacity (coal, nuclear, CCGTs) participating and clearing in the auction, looking closely at the 1.5GW of nuclear capacity that failed to clear;
  • Changes to interconnector de-rating factors including outlook on how these may still evolve going forward in-line with ENTSO-E’s proposals for using interconnected market specific scaling factors;
  • Composition of new build capacity, including a significant increase in battery storage capacity clearing in the auction, and participation of solar and onshore wind despite being able to participate in a possibly more lucrative Contracts for Difference scheme; and
  • No meaningful change in DSR capacity clearing in the auction despite being allowed to bid for longer duration capacity contracts for the first time,
• The policy and regulatory changes that may influence outcomes in future capacity auctions, including outlook on cross-border participation of capacity in the GB capacity market.