Batteries dominate newbuild agreements in UK's T-4 capacity market auction

Nearly 1.8 GW of derated UK battery energy storage capacity gained 15-year capacity market agreements in March 11's T-4 auction for delivery in 2028-29, representing over 80% of newbuild agreements in the competition, EMR Delivery Body data showed.

The four-year ahead capacity auction cleared at GBP60/kW/year ($84.20/kW/year), dipping from last year's record price of GBP63/kW/year for 2027-28 delivery, but still almost double the 2022 T-4 auction.

The strong clearing price helped ensure 15-year agreements for 880 MW of new battery storage units with durations of four hours and above, up from 123 MW in last year's auction and including around 240 MW awarded to eight-hour systems.

Four-hour duration batteries were derated to 41.74% in the auction, versus 83.78% for eight-hour duration batteries. This reflects the percentage of gross installed capacity considered to be firm by NESO, so gross capacity additions from awarded projects will be considerably higher.

Of notable awards, agreements were awarded to 292 MW of derated capacity at Fidra Energy's 1,400-MW (3,100-MWh) Thorpe Marsh site in Yorkshire, one of the largest BESS projects in Europe, and 104 MW at its 500-MW (1,100 MWh) West Burton C BESS project in Nottinghamshire.

In a statement March 12, Fidra confirmed it had secured 15-year agreements across all Capacity Market Units it entered into the auction, including for three existing gas units at West Burton B.

"The Capacity Market Auction is a key part of the UK's energy market and the revenue certainties it provides give renewable generation and storage companies the confidence to invest in the UK market," said Fidra Energy's CEO Chris Elder.

Another notable award was for 31 MW of long-duration compressed air storage being developed by Highview Energy. This is likely to relate to the company's 50-MW, 300-MWh liquid air energy storage project in Carrington. Platts has contacted the company for comment.

Newbuild thermal generation was confined to 174 MW of reciprocating engines and 139 MW of energy from waste capacity. Some 309 MW of open-cycle gas capacity exited the auction ahead of clearing, this relating to the Corby 2 OCGT project.

In total, the auction secured 43 GW of capacity agreements for 2028-29, with 29.4 GW relating to existing plants -- mainly gas-fired.

Some 6.6 GW of existing interconnection capacity were also awarded support, as were close to 1.5 GW of unproven demand-side response.

UK T-4 2028-29 CM AUCTION RESULTS:

(MW derated)