What is Electricity Market Reform and the Capacity Market?

The Capacity Market (CM) is one aspect of the government’s wider Electricity Market Reform (EMR) programme. EMR was designed and implemented with the aim of meeting three competing challenges to the Great Britain (GB) electricity market (often referred to as the energy ‘trilemma’):

1. •

   the need to intervene in the market to financially encourage development of secure and reliable electricity capacity in the face of the rapid closure of old and obsolete power stations and the increase in inherently unpredictable intermittent renewable generation

2. •

   the need to continue to intervene in the market to financially encourage development of low carbon and renewable generation, in order to respond to Climate Change and to meet national legally binding carbon and renewables targets

3. •

   the need to do both of the above in a way which maximises affordability for the end consumer, who ultimately funds the costs of such financial interventions

For more background on the EMR programme, see Practice Note: Electricity Market Reform (EMR).

Following lengthy consultation, in