The latest auction results show how battery storage is becoming a more visible part of Britain’s reliability framework, while conventional generation remains central to system security.
The UK Capacity Market is an important mechanism for maintaining electricity system security. It is designed to ensure that sufficient reliable capacity is available to meet demand, particularly during periods of system stress.
As the UK electricity system becomes increasingly shaped by renewable generation, flexibility is becoming more important. Wind and solar power can reduce carbon emissions, but they also increase the need for assets that can respond quickly, store electricity and support system stability.
The 2024/2025 Capacity Market auction results provide a useful signal for the market. They show that battery energy storage systems are gaining a stronger position within the UK’s reliability framework. At the same time, the results also show that nuclear and gas-fired generation remain important sources of dependable capacity.
For battery storage developers, investors and international renewable energy companies, these results are worth close attention.
How the Capacity Market Works
The Capacity Market operates through competitive auctions. Participants compete for capacity agreements and receive payments in return for being available to provide capacity when the electricity system requires support.
The UK holds two main types of capacity auction.
The T-1 auction takes place one year before the delivery year. It is mainly used to top up near-term capacity requirements and is often more relevant to existing assets.
The T-4 auction takes place four years before the delivery year. It is the main auction for securing longer-term capacity and is particularly important for new-build assets that require time to develop, finance and connect.
The auctions use a descending clock format. Prices fall round by round until supply and demand meet, creating a single clearing price for successful participants.
This structure means that the Capacity Market is not simply a subsidy for generation. It is a market-based reliability mechanism, designed to value availability and system adequacy.
T-1 Auction: Lower Price, Steady Battery Performance
The 2025/2026 T-1 auction cleared at £20/kW/year. This was significantly lower than the previous year’s clearing price and represented the lowest T-1 clearing price in several years.
Around 7.9GW of de-rated capacity secured agreements in the auction. According to the original analysis, nuclear and gas-fired generation together accounted for around three quarters of the awarded capacity, underlining their continuing importance in near-term system security.
Battery storage also performed steadily.
The auction awarded around 725MW of de-rated battery capacity. This was notable because the actual battery capacity entering the auction had fallen compared with the previous year, yet de-rated battery capacity increased. In simple terms, batteries were able to secure more recognised capacity value despite a smaller volume of physical capacity participating.
One reason is duration.
Longer-duration batteries can receive stronger de-rating treatment because they are able to support the system for longer periods during stress events. The original article noted that battery projects with more than three hours of full charge and discharge duration achieved improved de-rated capacity outcomes.
Specific projects also illustrate the market dynamics. Zenobē’s Blackhillock BESS did not secure a contract, while Kilmarnock and Thurrock both secured capacity agreements. Bramley, a 100MW / 330MWh project with more than three hours of duration, secured around 39MW of de-rated capacity.
This suggests that the Capacity Market is becoming more selective. Battery participation is no longer only about scale. Duration, technical configuration and de-rating performance increasingly matter.
T-4 Auction: Battery Storage Reaches a New High
The 2028/2029 T-4 auction produced a different market signal.
The auction cleared at £60/kW/year. This was lower than the previous year’s record level, but still high by historical standards. Around 43.0GW of de-rated capacity secured agreements against a target of approximately 43.7GW.
Battery storage achieved a particularly important result. Around 1.8GW of de-rated battery capacity secured agreements, a record level for BESS participation in the Capacity Market.
This result shows that battery storage is increasingly being recognised as part of Britain’s long-term capacity mix. It also reflects the rapid growth of the UK battery storage pipeline.
The original article noted several important features of the T-4 result. Battery connection capacity reached around 6.2GW, representing strong year-on-year growth. It also noted that 88% of battery projects had at least two hours of storage duration, compared with 75% in the previous year.
This matters because duration is becoming a central issue in battery storage economics.
A one-hour battery may be useful for fast response and short-duration services. A two-hour, four-hour or longer-duration battery may have greater value in supporting system adequacy, wholesale market trading and stress-event reliability.
The auction results therefore suggest a market direction: battery projects with longer duration and stronger technical design are likely to become more competitive in capacity-related markets.
Demand Response Also Strengthens
The T-4 auction also showed strong participation from demand-side response providers.
The original analysis highlighted that Enel X secured around 520MW, while Kiwi Power secured around 400MW. These results show that flexibility is not limited to battery storage.
Demand-side response, distributed energy assets and flexible consumption are becoming increasingly important in the UK electricity system. As the system becomes more decentralised and renewable-led, the ability to reduce or shift demand can be as valuable as adding new generation capacity.
This is important for international companies entering the UK market. The UK’s electricity system is not only looking for new power generation. It is looking for flexible, dispatchable and controllable capacity that can help maintain system stability.
Gas Remains Important
While battery storage performed strongly, the auction results should not be interpreted as a complete shift away from conventional generation.
Gas-fired generation remained a major part of the capacity mix. In the T-1 auction, gas and nuclear together accounted for a large share of awarded capacity. In the T-4 auction, some gas-fired projects exited at higher prices, but gas remained central to security of supply.
This reflects the practical reality of the energy transition.
Renewable generation is expanding, but the system still requires firm capacity. Until long-duration storage, demand-side response, interconnection and other flexible resources reach sufficient scale, conventional generation will continue to support reliability.
The key point is not that gas is disappearing. The key point is that the Capacity Market is gradually becoming more diversified.
Battery storage, demand response, interconnectors, nuclear and gas are all competing within the same reliability framework. Over time, this creates stronger opportunities for flexible low-carbon assets, but also raises the technical and commercial standards for project participation.
What This Means for Battery Storage Developers
The 2024/2025 auction results provide several lessons for battery storage developers.
First, duration matters. Projects with longer duration may achieve better de-rating outcomes and stronger capacity value.
Second, revenue stacking remains essential. Capacity Market payments can provide a useful income stream, but they are unlikely to be the only basis for a battery storage investment case. Developers must also consider wholesale trading, balancing services, ancillary services, grid constraints and operational strategy.
Third, project design must align with market rules. The Capacity Market rewards availability and system contribution, not just installed capacity. A technically strong battery project must also be structured to meet qualification, delivery and performance obligations.
Fourth, the UK market is becoming more competitive. As more battery projects enter the pipeline, investors and developers will need to differentiate projects through location, duration, grid access, commercial strategy and operational capability.
Implications for International Renewable Energy Companies
For international companies, the UK Capacity Market offers a useful window into the country’s energy transition.
The UK is not only building renewable generation capacity. It is also developing market mechanisms to support system reliability, flexibility and investment in dispatchable assets.
This creates opportunities for companies involved in battery storage, energy management software, demand response, flexible generation, grid-supporting technologies and project development.
However, the market is not simple. UK battery storage projects require a detailed understanding of capacity rules, de-rating factors, connection strategy, revenue stacking and market participation.
For companies entering the UK market, this means that a product-led approach is not enough. Technology must be combined with local market knowledge, project development capability and a clear commercial strategy.
Conclusion
The UK Capacity Market auction results for 2024/2025 show a market in transition.
The T-1 auction cleared at a lower price, but battery storage still performed steadily. The T-4 auction cleared at a high historical level and delivered a record result for battery storage, with around 1.8GW of de-rated BESS capacity securing agreements.
These results suggest that battery storage is becoming a more important part of the UK’s security-of-supply framework. They also show that longer-duration storage is gaining relevance as the electricity system becomes more flexible and renewable-led.
At the same time, conventional generation remains central to system adequacy. The UK’s energy transition is therefore not a simple replacement of one asset class by another. It is a gradual restructuring of the electricity system, where reliability, flexibility and commercial deliverability all matter.
For battery storage developers and international renewable energy companies, the message is clear: the UK market offers strong opportunities, but success depends on more than installed capacity. It requires the right technical design, market strategy, grid position and delivery capability.
Sources
National Energy System Operator (NESO). Capacity Market.
EMR Delivery Body. Capacity Market Auction Results.
Modo Energy. Batteries win a record volume of T-1 Capacity Market contracts.
Montel. GB Capacity Market T-4 Auction: Results Review.
PV Magazine. UK T-4 auction clears path for nearly 7 GW of new battery storage by 2028.
UK Government / Department for Energy Security and Net Zero. Capacity Market policy and guidance.
Disclaimer
This article is adapted from SEI’s WeChat publication originally published on 22 March 2025. It is based on publicly available information available on or before that date. The analysis reflects SEI’s independent assessment and is provided for informational purposes only. It should not be considered investment, legal or commercial advice.