CRA Insights

Why is the missing money still missing?

July 26, 2016

The GB Capacity Market was developed with the expectation that it would help to fill the looming capacity gap by contributing to the funding of substantial investments in new combined or open cycle gas turbine capacity. But after two Capacity Market auctions, no new large-scale capacity has been successful in gaining a capacity agreement. Instead, the mechanism has been a catalyst for hundreds of MWs of small-scale, diesel- and gas-fired distributed generation capacity which benefits not just from funding from the Capacity Market but also from favourable transmission charging arrangements.
This has shifted the focus of policymakers to the transmission charging arrangements in GB. While such a review is necessary, it may still not be sufficient to bring new large-scale generation online. Experience from the US markets shows that still more may be required to find the “missing money”. To read more, click the link below.

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