National Grid ESO Electricity Capacity Report
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National Grid ESO Electricity Capacity Report 31 May 2020 (submitted to Department for Business, Energy and Industrial Strategy) Results from the work undertaken by National Grid ESO for BEIS to recommend the capacity to secure through the Capacity Market. National Grid ESO Electricity Capacity Report 31 May 2020 Copyright Copyright National Grid Electricity System Operator (National Grid ESO) 2020, all rights reserved. No part of this report may be reproduced in any material form (including photocopying and restoring in any medium or electronic means and whether or not transiently or incidentally) without the written permission of National Grid ESO except in accordance with the provisions of the Copyright, Designs and Patents Act 1988. Disclaimer This document has been prepared solely for the purpose of the Electricity Market Reform (EMR) Capacity Market (CM) and is not designed or intended to be used for any other purpose. Whilst National Grid ESO, in its role as EMR Delivery Body, has taken all reasonable care in its preparation, no representation or warranty either expressed or implied is made as to the accuracy or completeness of the information that it contains and parties using the information in this document should make their own enquiries as to its accuracy and suitability for the purpose for which they use it. Neither National Grid ESO nor any other companies in the National Grid plc group, nor any directors or employees of any such company shall be liable for any error or misstatement or opinion on which the recipient of this document relies or seeks to rely other than fraudulent misstatement or fraudulent misrepresentation and does not accept any responsibility for any use which is made of the information contained in this document or (to the extent permitted by law) for any damages or losses incurred. Contact Any enquiries regarding this publication should be sent to National Grid ESO at [email protected]. Page 1 of 116 National Grid ESO Electricity Capacity Report 31 May 2020 National Grid ESO Electricity Capacity Report 1. Executive Summary ............................................................................................ 5 1.1 Results and Recommendations ..................................................................................... 6 1.1.1 2021/22 T-1 Auction Results .................................................................................. 7 1.1.2 2024/25 T-4 Auction Results .................................................................................. 9 1.2 Interconnected Countries De-rating Factor Ranges .................................................. 11 1.3 De-rating Factors for Conventional Plants, Storage and Renewables .................... 12 2. The Modelling Approach ................................................................................... 15 2.1 High Level Approach ..................................................................................................... 15 2.2 DDM Outputs Used in the ECR ..................................................................................... 16 2.3 Stakeholder Engagement ............................................................................................. 17 2.4 High Level Modelling Assumptions ............................................................................. 17 2.4.1 Demand and Generation ........................................................................................ 17 2.4.2 Interconnector Assumptions ................................................................................... 18 2.4.3 Station Availabilities and De-rating Factors ........................................................... 19 2.5 Development projects ................................................................................................... 20 2.5.1 Process for selecting which development projects to progress ............................. 21 2.5.2 Key projects undertaken ......................................................................................... 21 2.6 Modelling Enhancements since Last Report .............................................................. 24 2.7 National Grid ESO Analysis Delivery Timeline 2020 .................................................. 24 2.8 Quality Assurance ......................................................................................................... 25 3. Scenarios & Sensitivities .................................................................................. 26 3.1 Overview ......................................................................................................................... 26 3.1.1 Base Case .............................................................................................................. 28 3.2 Scenario Descriptions ................................................................................................... 29 3.2.1 Consumer Transformation ...................................................................................... 29 3.2.2 System Transformation .......................................................................................... 31 3.2.3 Leading the Way ..................................................................................................... 32 3.2.4 Steady Progression ................................................................................................ 33 3.3 Demand Forecast until 2024/25 .................................................................................... 34 3.4 Demand Forecast 2025/26 onwards............................................................................. 36 3.5 Generation Capacity until 2024/25 ............................................................................... 37 3.6 Generation Capacity 2025/26 onwards ........................................................................ 39 3.7 Distributed Generation .................................................................................................. 40 3.8 Demand Side Response ................................................................................................ 42 3.9 Interconnector Capacity Assumptions........................................................................ 45 3.10 Sensitivity Descriptions and Justifications .............................................................. 46 3.10.1 High / Low Wind ................................................................................................... 47 3.10.2 High / Low Plant Availabilities .............................................................................. 47 3.10.3 Cold / Warm Winter .............................................................................................. 48 3.10.4 High / Low Demand .............................................................................................. 48 Page 2 of 116 National Grid ESO Electricity Capacity Report 31 May 2020 3.10.5 Non-delivery ......................................................................................................... 48 3.10.6 Over-delivery ........................................................................................................ 49 3.10.7 Sensitivities Considered but Not Included ............................................................ 49 3.11 15-Year Horizon ........................................................................................................... 50 4. De-rating Factors for CM Auctions ................................................................... 52 4.1 De-rating Factors for Conventional Plants, Storage and Renewables .................... 52 4.1.1 Feedback on Methodologies .................................................................................. 54 4.2 Interconnectors .............................................................................................................. 55 4.2.1 Methodology ........................................................................................................... 55 4.2.2 European Sensitivities ............................................................................................ 57 4.2.3 BID3 Pan-European Model Results ....................................................................... 60 4.2.4 Country de-ratings .................................................................................................. 61 5. Results and Recommendation for 2021/22 T-1 Auction ................................... 72 5.1 Scenarios and Sensitivities to Model .......................................................................... 72 5.2 Results ............................................................................................................................ 72 5.3 Recommended Capacity to Secure ............................................................................. 74 5.3.1 Covered range ........................................................................................................ 75 5.3.2 Adjustments to Target Capacity ............................................................................. 75 5.3.3 Comparison with 2021/22 T-4 recommendation .................................................... 76 5.3.4 Robustness of LWR approach to sensitivities considered ..................................... 80 6. Results and Recommendation for 2024/25 T-4 Auction ................................... 81 6.1 Sensitivities to model .................................................................................................... 81 6.2 Results ...........................................................................................................................