In a new briefing published today, Frontier (Europe) and Lane Clark & Peacock (LCP) assess the results of the second Capacity Market auction, announced last week by National Grid and the Department for Energy and Climate Change. The Capacity Market is a government policy designed to ensure that there is sufficient generation capacity to meet electricity demand.

The auction clearing price of £18 per kW will be paid to all successful participants for providing available capacity in 2019/20, and will cost consumers £835m in that year. While the government is likely to be pleased with another auction that has resulted in a relatively low clearing price, the results of the auction still raise concerns. In the bulletin, we examine:

• who has received contracts;
• the implications for security of supply of further closures among plants that failed to clear in the auction; and,
• the reasons for almost 1 GW of small small-scale gas and diesel generation clearing in the auction, highlighting their unfair competitive advantage over more efficient generation.

Frontier (Europe) regularly advises public and private sector organisations on issues relating to security of supply and electricity market design across Europe.

For more information, please contact us at media@frontier-economics.com, or call +44 (0) 20 7031 7000.