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Capacity (EMR and CMN)

On this page, you will find out how National Grid handles electricity capacity. As Electricity Market Reform (EMR) delivery body, we regulate and allocate electricity capacity. We are also responsible for reporting events that may lead to a 'system stress event', which we do through Capacity Market Notices (CMN).

EMR Delivery Body Portal

For further information on EMR market arrangements, details of the role that National Grid plays, and to subscribe to our bulletins, please visit our EMR Delivery Body website.

Go to the EMR Delivery Body website

Electricity Market Reform (EMR)

EMR is helping to bring forward investment in low-carbon technologies in an affordable, secure and sustainable way. As the delivery body administering new market arrangements, we provide the Capacity Mechanism (CM) and Contracts for Difference (CfD), both of which provide incentives for the investment required in our energy infrastructure.

Capacity Market (CM) and Contracts for Difference (CfD)

The Capacity Market is open to all capacity providers, including new and existing power stations, electricity storage plant, capacity provided by voluntary demand reduction, and (from 2015 onwards) interconnectors. It offers a steady, predictable revenue stream, upon which providers can base their future investments. In return for capacity payments revenue, providers must deliver energy at times of system stress, or face penalties.

Potential providers secure the right to receive capacity revenues by participating in a competitive auction process which will set the level of capacity payments. Capacity auctions are held four years ahead of delivery, with a subsequent auction held one year ahead. The first capacity auction took place in December 2014, for delivery obligations beginning in October 2018.

Contracts for Difference (CfD) were implemented by the UK Government to incentivise investment in new low-carbon generation technology. They provide long-term revenue stabilisation to low-carbon generators, allowing investment to come forward at a lower cost of capital and therefore at a lower cost to consumers.

CfDs require generators to sell energy into the market as usual but, to reduce this exposure to electricity prices, CfDs provide a variable top-up from the market price to a pre-agreed 'strike price'. At times of high market prices, these payments reverse and the generator is required to pay back the difference between the market price and the strike price, thus protecting consumers from overpayment.

Capacity Market Notices (CMN)

The Capacity Market began on 01 October 2016, bringing with it new responsibilities for the System Operator (SO), including the development of a new Capacity Market Notice website. This website is a key component to facilitate delivery against SO responsibilities within the Capacity Market and allows all participants to subscribe to email and SMS alerts. The SO’s main responsibilities are to monitor system margin and communicate where the expectation of a system stress event is higher, through issuing CMNs, four hours ahead of real time.  

Confirmation of a system stress event is communicated in the days following any instances where demand control has been instigated. We will also share specific information with the CM and settlement delivery bodies.