2017 Capacity Market Year - Ahead Auction

The auction cleared at a price of £6.95/kW (kilowatt) with the provisional results published on Friday 3rd February and subject to confirmation by the Secretary of State for Business, Energy and Industrial Strategy.

The SSE capacity which has provisionally secured an agreement in the auction comprises:

• 840 MW of hydro electric and pumped storage plant; and
• 3,611 MW of coal, gas-fired and embedded power generating plant.

To secure the revenue arising from the Capacity Market, providers of generating capacity must produce electricity when the system requires it in 2017/18; failure to do so will result in penalties being levied.

The total value secured by SSE is £30.9m. The revenue will be received on a pro-rated basis throughout the delivery year.

SSE’s Peterhead power station (1,034MW de-rated capacity) did not secure an agreement. The station’s location means it is required to pay significantly higher Transmission Entry Capacity (TEC) costs than other power stations on the electricity system. This puts it at a disadvantage in the Capacity Market auction.  In light of these provisional auction results, the fact that Peterhead has failed to secure a contract in any of the three previous Capacity Market auctions, and other economic considerations, SSE will be reviewing future options for the station over the coming months and will engage with all stakeholders during this review. The review will not impact current operations at the station.

One unit at SSE’s Fiddler’s Ferry power station (423MW de-rated capacity), which is not fitted with Flue Gas Desulphurisation plant, also failed to secure an agreement.

As part of its ongoing dialogue SSE will engage with the UK Government about the results of the auction, and the potential implications for the design of future Capacity Market auctions.

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