Capacity Market Prequalification Opens 4 August: Are You Ready?

Capacity Market Prequalification Opens 4 August: Is Your Business Ready for the Next Capacity Market Auction?

On 30 June, we hosted a webinar exploring the UK Capacity Market, how the scheme works, and how industrial and commercial organisations can generate additional revenue by participating. With the Capacity Market prequalification window opening on 4 August, now is the ideal time to assess your eligibility and prepare for the next Capacity Market auction.

Preparations are already underway across the market as businesses look to secure contracts in the upcoming T-1 and T-4 Capacity Market auctions.

What Is The Capacity Market?

The Capacity Market (CM) is a government-backed scheme designed to ensure the UK electricity system has enough reliable capacity to meet demand during periods of system stress.

Through annual auctions, capacity providers secure payments in return for being available when required. Eligible assets can include:

• Backup generators

• Combined Heat & Power (CHP) assets

• Battery energy storage systems (BESS)

• Demand Side Response (DSR) providers

• Flexible industrial and commercial electricity users
  

For businesses, the Capacity Market can create a valuable new revenue stream while helping support grid stability, security of supply and the UK's transition to a more flexible energy system.

Capacity Market Auction Parameters Confirmed for 2027

The Government has now confirmed the procurement targets for the next auction round, providing much-needed certainty for market participants:

• T-1 Capacity Market Auction (2027/28 Delivery Year): 5GW target
• T-4 Capacity Market Auction (2030/31 Delivery Year): 40.9GW target

Both auctions are scheduled for March 2027.

The increased T-4 Capacity Market procurement target reflects a rise from last year's auction, which cleared at £27.10/kW/year. The direction of travel is clear. As the UK electricity system comes under increasing pressure and Electricity Margin Notices (EMNs) become more common, the Capacity Market is playing an ever more important role in maintaining security of supply and supporting grid resilience.

As a result, opportunities are growing for a broader range of assets to participate, extending beyond the traditional generation-only model to include technologies such as battery storage, demand-side response and flexible energy users.

Capacity Market Prequalification Opens Soon

The mechanics of the Capacity Market are relatively simple: participants receive monthly payments for being available when needed, whether through a T-1 contract securing revenue a year ahead or a T-4 agreement providing longer-term certainty.

What often catches businesses out isn't the concept itself, but the timing. Qualifying an asset, completing the necessary testing and registration requirements, and submitting a successful Capacity Market prequalification application can all take time. With the prequalification window opening on 4 August and closing on 29 September, organisations that leave preparation too late risk missing the opportunity altogether.

Many businesses are surprised to discover they already have eligible assets. A CHP unit, backup generator, battery storage system, or simply the ability to reduce or shift electricity consumption at short notice can all provide a route into the Capacity Market. We see this across manufacturing sites, logistics hubs, retailers, healthcare providers and hospitality businesses alike, often without operators having previously considered participation in the scheme.

How We Support Capacity Market Participants

Our dedicated Capacity Market team supports organisations throughout the full participation process, helping them to stay on track and maximise revenue.

Here's what that looks like in practice:

• Capacity Market Prequalification - We assess asset eligibility, manage registration requirements and ensure metering arrangements meet Capacity Market standards.

• Capacity Market Bid Strategy - We build an auction bidding strategy based on expected clearing pricing, so no guessing at a number!

• Responding to Capacity Market Notices - The moment a Capacity Market Notice is issued, our team is already on the front foot coordinating an effective response on your behalf.

• Satisfactory Performance Testing - We support you through Satisfactory Performance Days (SPDs) and performance testing requirements, so your commitment is properly evidenced.

• Ongoing Compliance and Contract Management - We  help manage Capacity Market obligations throughout the delivery period with products tailored to your assets and risk appetite.

• Optimising Revenue Streams - We ensure Capacity Market participation complements other revenue streams, including Demand Flexibility Services (DFS) and DNO Flexibility Services.

Next Steps Before Capacity Market Prequalification Opens

With the Capacity Market prequalification window opening on 4 August, now is the time to understand whether your assets qualify and what revenue opportunities may be available.

We'll assess your site's eligibility, estimate potential Capacity Market earnings and identify the most effective route into the scheme, helping you maximise value ahead of the upcoming Capacity Market auction.

Get in touch with our team today to discuss your Capacity Market opportunity.