Selective overcompensation in the Capacity Market

On 15 November 2016, following a review of the responses to the consultation published on the 27 September, the Government laid the Capacity Market (Amendment) (No.3) Rules 2016 before Parliament. These Rules will come into force from the 21st November 2016. A copy of the rules, and a letter setting out the Government’s Response, can be found above.

In March 2016, the Government consulted on an exclusion from future CM auctions of projects that have used investment through risk finance schemes. In our response to this consultation, however, we noted that an outright exclusion may create risks to auction liquidity. We therefore now propose to offset investment received through risk finance schemes and spent on prospective capacity, from Capacity Market payments. This will ensure that those projects that have not had support through a risk finance scheme are able to compete fairly.