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UK electricity capacity auction for 2027/28 clears at record high

Published 27/02/2024, 11:53
Updated 28/02/2024, 08:05
© Reuters. FILE PHOTO: An electricity pylon is seen in Leicester, Britain, April 25, 2020. REUTERS/Andrew Boyers/File Photo

LONDON (Reuters) -Britain's auction to ensure enough electricity capacity for 2027/28 cleared at a record high of 65 pounds ($82) per kilowatt (kW) per year, National Grid (LON:NG) said late on Tuesday.

Britain launched its power capacity market in 2014, offering to pay providers for making capacity available to ensure the country has enough power.

A total of around 43 gigawatts (GW) of capacity was procured, National Grid's EMR (electricity market reform) delivery body website said in a provisional auction document.

The auctions are usually held about four years in advance of the delivery date, with another auction for a smaller amount of capacity held a year before delivery.

Tuesday's result was a record high for an auction held four years in advance.

"The high clearing price implies tight supply/demand dynamics in the UK power generation market and offers some protection to generators against gas/carbon driven weakness in wholesale power prices," analysts at Jefferies said in a research note.

Winners of contracts included utilities such as SSE (LON:SSE), EDF (EPA:EDF), Uniper, Drax and RWE (LON:0HA0).

The majority of capacity contracts, 77.5%, were awarded to existing power generation plants with 13% also awarded to existing interconnectors with other countries, the documents showed.

© Reuters. FILE PHOTO: An electricity pylon is seen in Leicester, Britain, April 25, 2020. REUTERS/Andrew Boyers/File Photo

Plants to be newly built secured 3.9% of the capacity while new interconnectors secured 2.4%.

($1 = 0.7885 pounds)

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