Capacity Market contracts awarded to more than 2GW of battery storage in UK and Italy

Capacity Market contracts awarded to more than 2GW of battery storage in the UK and Italy

The award of contracts to 1GW of battery storage was the “biggest news” to emerge from the latest round of Capacity Market auctions held in the UK, according to energy consultancy EnAppSys.  Energy-Storage. news’ sister site Current± reported the full results earlier this week of the UK’s T-4 Capacity Market auction, awarding contracts beginning in the 2025/2026 window. It cleared at a record high price of £30.59 (US$41.03)/kW/year, due mainly to the decommissioning of old assets and higher capacity needs.

While gas plants were the biggest winners, awarded 27,632MW of contracts from the 42,364MW total, interconnectors got just under 7GW and pumped hydro storage 2.5GW, it was the 1,093MW of battery storage contracts which should be paid the closest attention, EnAppSys director Paul Verrill said.

“Battery project winners are the biggest news in this auction, with many new-build battery projects having chosen the year with the highest ever clearing price for a T-4 auction to come online,” Verrill said. “This is a major boost in particular for those units that could secure long-term contracts.”

Around 8.3 GW of battery storage registered to participate, although due to de-rating rules, this was equivalent to more like 2.3GW. EnAppSys’ director said de-rating meant battery assets would only see about 30% of the CM payment price.

Awarded contract lengths range from 1 to 15 years. Another industry expert, Chris Matson, partner at energy system analysis and modelling group LCP said that the planned decommissioning of five nuclear plants and the retirement of coal off the system entirely by 2025 left a gap in supply which new-build resources could fill at higher capacity prices.

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