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UTILITY WEEK | 25TH NOVEMBER - 1ST DECEMBER 2016 | 13 Policy & Regulation 2017 because of the "challenging market conditions", although it too has been regis- tered for the T-4 auction. In July, then-energy secretary Amber Rudd revealed that Cottam and West Bur- ton A had missed their capacity market milestones for delivery in 2020/21, having previously secured three-year agreements available to refurbished generation. EDF had reportedly scrapped plans to upgrade the plants to enable them to operate for longer than under the terms of the Indus- trial Emissions Directive. Both have now pre- qualified to bid for shorter one-year contracts for existing generation in the T-4 auction. In addition to the T-4 auction scheduled for December, the government is holding the early auction in January for delivery next winter to replace the SBR. The prequalifica- tion register for this auction indicates that some mothballed gas capacity could return. Barking power station and Uniper's Killingholme plant are both currently absent from the energy market but have signed up to the register. Centrica and SSE have also reg- istered their South Humber and Peterhead CCGT plants with higher capacities than they currently have available to the market. Their intention to return could further delay the building of new gas. A breakthrough for batteries This year could see a breakthrough for bat- teries in the capacity market aer more than 2GW prequalified for the upcoming auc- tion, having been entirely absent from the first two. UK Power Reserve has 200MW of battery storage prequalified via its subsidiary UK Energy Reserve. Chief executive Tim Emrich explains that the falling cost of storage has been significant. He tells Utility Week: "There is hope that this capacity market will clear higher than previous auctions, which helps. They make it a more compelling investment than even a year ago." However, his optimism about the pros- pects for batteries in the capacity market is limited, because they are currently "some of the most expensive projects" to have pre- qualified. He expects the auction to clear at around £25/kWh, a price that would be "disappointing to most battery developers" – although projects which recently secured energy frequency response (EFR) contracts are likely to be successful. Emrich also worries that some battery projects could be caught up by the changes to the network charging regime that Ofgem is considering in response to the success of diesel generators in the capacity market. "I think this capacity market auction is the best chance so far, and could be the only chance ever, for batteries to participate in any significant way," he says. What to expect As things stand, efforts to shut out small- scale diesel generators are likely to have a limited impact on this year's auction – they certainly haven't done much to dissuade potential investors from registering. They are likely to increase the price of their bids in anticipation of changes to embedded benefits, but not by enough to deliver the £40/kW-plus clearing price that will be needed to secure significant volumes of new gas capacity. Batteries are likely to find some success, although those that have had recent success in National Grid's EFR tender are likely to have a distinct advantage. Whatever happens, the results of the auc- tion will provide more clarity on the future of the UK's dying coal fleet and where the energy system as a whole is heading. THE UPCOMING CAPACITY MARKET AUCTIONS Auction Initial delivery Auction date Procurement target Four-year-ahead main auction (T-4) 2020/21 6 December 2016 51.7GW Year-ahead early auction 2017/18 31 January 2017 53.6GW Transitional arrangements auction for demand-side response 2018/19 22 March 2017 300MW LARGEST NEW CCGT PLANTS TO PREQUALIFY FOR THE T-4 AUCTION Name Location Developer Connection De-rated capacity (MW) capacity (MW) Knottingley Knottingley, West Yorkshire Knottingley Power (a subsidiary of ESB) 1,652 1,487 Damhead Creek 2 Rochester, Kent Scottish Power Generation 1,638 1,474 Thorpe Marsh Doncaster, South Yorkshire Thorpe Marsh Power 1,600 1,440 Willington C Willington, Derbyshire MPF Generation 1,600 1,440 Gateway Energy Centre Stanford-le-Hope, Essex Gateway Energy Centre (a subsidiary of Intergen) 1,217 1,095 Keadby 2 Keadby, Lincolnshire Keadby Generation (a subsidiary of Intergen) 820 738 Spalding Energy Expansion Spalding, Lincolnshire Spalding Energy Expansion 680 612 King's Lynn A King's Lynn, Norfolk Centrica KL 370 333 Knottingley Damhead Creek 2 Thorpe Marsh Willington C Gateway Energy Centre Keadby 2 Spalding Energy Expansion King's Lynn A