Question to the Department for Business, Energy and Industrial Strategy:
To ask the Secretary of State for Business, Energy and Industrial Strategy, what assessment he has made of the potential merits of removing the capacity cap from contract for difference auctions; and if he will make a statement.
Capacity caps can drive competitive auctions and deliver value for money for consumers. In the absence of a capacity cap or similar constraint, competitors in Contract for Difference auctions would have no incentive to bid below the wholesale price of electricity. A capacity cap was first deployed in the third Contract for Difference auction in 2019, which secured nearly twice the capacity of the previous auction with a 30% reduction in clearing prices. We continue to keep all aspects of the Contracts for Difference Scheme under review and will publish auction parameters in due course.