Capacity Market charges on your business energy bill — what they are and why they change
The Capacity Market keeps the UK lights on by paying generators to be available at peak. Here's how it shows up on your bill and how it's changing.
What the Capacity Market pays for
The Capacity Market (CM) is a UK auction mechanism that pays generators, storage and demand-side response to guarantee capacity during system-stress hours. It exists to keep enough dispatchable capacity available for winter peak demand — a reliability insurance policy for the grid.
How it appears on your bill
CM costs are recovered through a settlement charge levied on suppliers, who pass it through to business customers either as a bundled component of a fixed unit rate or, on flexible/pass-through contracts, as a discrete line on your bill (often shown as CM or Capacity Market Levy).
Why the figure changes year to year
The pound-per-kW clearing price of each CM auction depends on how tight the system looks in the delivery year. In tight years auctions clear high; in comfortable years they clear low. Because charges are spread over demand during specified settlement hours, both the pence rate and your billed pounds can vary meaningfully year to year.
What to do at renewal
On a fixed contract the CM component is baked into your unit rate — the supplier has taken the risk. On pass-through it moves with the market and your load shape. Ask your broker or supplier for the CM forecast used in any quote comparison and, on pass-through, whether shifting load away from settlement windows could reduce exposure.
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