Act now to secure Capacity Market revenue
Organisations will miss the chance to earn income from their flexible energy assets if they don't act fast to meet the urgent Capacity Market deadline.
Don't miss the deadline to participate in Capacity Market
Those that don't start the application process before the end of June 2018 are in danger of missing out on up to 15-years of steady revenue, that could amount to thousands of pounds per year.
There is a single window each year to sign up for the Capacity Market. Although the final deadline for the upcoming 2019 auctions is September 2018, businesses should allow at least two months for the complex assessment, pre-qualification and registration process.
The Capacity Market opportunity enables organisations to unlock extra value from their on-site power generation equipment, such as Combined Heat and Power (CHP), or energy consuming processes.
In return for helping to balance the national power grid during the occasional occurrence of a 'System Stress Event', Capacity Market participants are rewarded for agreeing to supply power or reduce their demand on the grid. These stress events are rare and usually last up to 30 minutes, with participants given four-hours' warning.
Fixed payment is guaranteed whether or not the agreed capacity is called on. Participants simply need to prove that they can 'turn down' consumption or 'turn up' onsite generation, if required.
Two auction opportunities
There will be two Capacity Market auctions during the early part of 2019:
- T+4 (four-year ahead) auction, which is a 15-year contract – for delivery from 2021/22. This is most applicable to larger generators and is available to new generators, even if they haven't yet been commissioned.
- T+1 auction, which is a 1-year contract – for delivery from 2019/20 (usually Oct-Sept). This is most applicable to older generators and flexible demand assets.
Six-Steps to securing Capacity Market revenue
Centrica Business Solutions is Europe's leading Demand Side Response (DSR) provider and can manage the complete Capacity Market process. We follow a six-step approach, but it is critical that steps 1 and 2 are completed before the September 2018 deadline, which means starting now.
1. Assessment and preparation
- Use data and advanced analytics to determine business energy profile and quantify flexible capacity. Understand business needs and any flexibility constraints.
- Set operational strategy and model potential value.
- Select appropriate auction, complete registration and set up administration process.
- Prepare commercial contract to include CHP or other assets.
- Correctly lodge necessary information to ensure all generation or other DSR resources are prequalified before the September 2018 deadline, including a separate application for each Capacity Market Unit (CMU).
- Centrica Business Solutions has a 100% pre-qualification success rate for CHP units – winning the largest number of new-build contracts in the 2016 Capacity Market auction.
- Manage competitive process to award Capacity Market agreements, starting with pre-auction information exchanges with delivery body, including confirmation of eligibility, applicant credit cover and planning consents, where appropriate.
- Coordinate post-auction process, including provision of evidence to support new build, refurbished or unproven CMUs – to secure credit cover.
4. Installation and contract delivery
- Install and commission new CHP/ other generation units, or modify existing equipment and start generating power.
- Ensure 100% adjusted load factor delivery against agreed capacity obligation in response to Capacity Market warning signals. This is managed remotely and automatically, without any customer involvement and with minimal disruption.
5. Risk Protection
- Mitigate risk to avoid substantial non-delivery penalties for those failing to supply their agreed capacity. Centrica's track record of contract delivery is so strong that we guarantee no pass through of Capacity Market penalties to customers.
6. Maximise revenue
- Monitor and manage asset across contract lifetime to optimise earnings.
- Centrica's DSR expertise means customers have an added opportunity to participate in the lucrative Static Firm Frequency Response (FFR) or Dynamic FFR markets.
- Centrica succeeds in generating much higher FFR revenue than its competitors by bundling customers' assets across many locations, or integrating them with other customers' assets to maximise qualifying capacity.
Start preparing now for the next Capacity Market auction. Find out how you can maximise the full potential of your CHP or other energy assets by contacting Centrica Business Solutions: firstname.lastname@example.org