Consultation outcome

Open letter on new technologies in the Capacity Market, 2024

Updated 29 November 2024

Rule 2.4 of the Capacity Market Rules requires the Secretary of State to consult with stakeholders by 1 October each year, to determine whether any new generating technologies are capable of contributing to security of supply. Any new technologies, not already identified as a Generating Technology Class, should be eligible to participate in future Capacity Market auctions. This open letter seeks views on whether such new generating technologies exist.

In response to our consultation last year (opened September 2023), several stakeholders provided updates on emerging technologies:

• vehicle-to-X (V2X) technology was highlighted for its capacity to enhance energy security through both demand reduction as well as the emerging potential of Vehicle-to-Grid (V2G) discharge, whilst acknowledging difficulties the technology faces. Positive recent developments in V2X technologies have seen an increasing number of V2X-capable vehicles coming to market and the introduction of the UK’s first Vehicle-to-Grid energy tariff in 2024. Government continues to explore and support development of V2X, including a commitment of up to £12.6m to further support V2X technology development, building on funding from the previous V2G Programme (2018 to 2022). The current Phase 2 of the V2X Innovation Programme commenced in October 2023 and will conclude in 2025.
• the government has also consulted further on reducing barriers to entry for low carbon technologies such as DSR and changes to technology categorisations (including V2X) within the Capacity Market via the Phase 2 Consultation launched in October 2023 and response published in July 2024
• Offshore Hybrid Assets (OHAs), which combine traditional point-to-point interconnectors with offshore wind generation, were identified as having the potential to enhance energy security by facilitating both cross-border power flows and the integration of renewable energy from offshore wind farms. Multi-purpose interconnectors (MPIs), where wind farms are located in UK waters, and non-standard interconnectors (NSIs), connecting to wind farms in other countries, are emerging as key innovations in this space
• additionally, stakeholders proposed smart transformers, which can reduce voltage and act as demand reduction technologies. Also raised were Hydrogen-to-power (H2P) assets, on which government published a consultation in December 2023 and is currently reviewing

Next steps

Government will continue to consider emerging technologies with the ESO and how best to assess their potential contribution to security of supply and any future participation in the Capacity Market.

Please respond with details of the new technology and evidence of its contributions to security of supply to [email protected] by 11pm on 1 November 2024

Some examples of the type of information that would support suggestions and aid our decision-making are provided below. Please note that this list is not exhaustive, and it is not necessary to provide all the information below in order for us to consider your suggestion. However, the more information we receive, the more evidence we will have to assist in our decision-making process. If authorised, we may get in touch with respondents to ask follow-up questions.

Please include your contact details in your response if you are open to receiving follow up questions.

Please also indicate in your response whether you would like us to treat your response as confidential.

Types of information

Examples of the type of information include, but is not limited to:

• a brief description of the technology
• if the technology already exists, any examples of commercial deployment at scale
• if there is there any evidence to show that the technology is commercially viable (for example, a proven business model)
• if the technology is able to contribute to security of supply at periods of peak electricity demand (for example, by generating electricity or reducing electricity demand)
• any evidence relating to the reliability and availability of this technology at periods of peak electricity demand
• if the technology is significantly different from existing Capacity Market generating technology classes to warrant its own class
• a description of the fuel source or source of energy for the technology (including if it is fuelled by a fossil fuel)
• if the output of this technology fully controllable or if it is dependent on an intermittent energy source
• if there are any limitations on the length of time the technology can operate continuously at full capacity during peak periods (for example, limitations on fuel, energy source, or running hours and typical duration limits)
• contact details for any follow up questions

We will publish the outcome of the review by 1 December 2024, as required by Rule 2.4.1(b) of the Capacity Market Rules.