Capacity Market: Consultation on Changes for Prequalification 2027

Wednesday 2nd September 2026 Written Statements

[The Minister for Energy (Michael Shanks)]

I am tabling this statement to inform Members of the publication of two documents relating to the capacity market:

A consultation on changes for prequalification 2027; and

An open letter inviting stakeholder views on new technologies in the capacity market.

The above documents support our objectives of delivering clean power by 2030 and accelerating progress towards net zero, while ensuring security of supply.

Since its introduction in 2014, the capacity market has secured sufficient capacity to ensure consistent and reliable electricity supply in Great Britain. The funding provided through the capacity market scheme aims to incentivise investment in new and existing generation, interconnectors, batteries and consumer-led flexibility mechanisms to ensure that sufficient capacity is available to meet future demand when required. This capacity is acquired through competitive annual auctions held at intervals four years ahead and one year ahead of their respective delivery years. The Government regularly amend the framework underpinning the capacity market before auction cycles to ensure that it is cost-effective and meets broader strategic objectives, including the transition to clean power.

The prequalification 2027 consultation published today seeks views on a package of proposals intended to strengthen confidence that capacity secured through the capacity market will be delivered when required, ensure that consumer-led flexibility is appropriately valued for its contribution to security of supply, and deliver further administrative and operational improvements to the scheme.

Specifically, the consultation seeks views on:

Reviewing the delivery assurance framework: Strengthening confidence that capacity will deliver when required. This includes enhanced testing and more stringent data requirements.

Consumer-led flexibility: Referred to as demand-side response, or DSR, in CM legislation. Proposals consider how we can more accurately de-rate DSR capacity, support DSR capacity through to delivery by making trading and terminations changes and improve operational efficiencies.

Further administrative and operational improvements to the capacity market: Clarifications and amendments to improve transparency, consistency and enforceability of the rules.

Secondly, we are publishing an open letter inviting stakeholder views on new generating technologies that should be considered for inclusion in the capacity market. Stakeholders are now invited to provide views and supporting evidence on such technologies.

The capacity market remains Great Britain’s main mechanism for ensuring capacity adequacy, and these publications focus on how the Government can ensure the scheme continues to meet its primary security of supply objective. The proposals put forward seek to ensure that the scheme remains fit for purpose and continues to play a crucial role in delivering secure electricity supplies to consumers in a clean power system.

[HCWS303]