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Electricity Market ReformCapacity Market Implementation PlanThis implementation plan identifies the key milestonesand activities required to successfully implement theCapacity MechanismVersion 1.2Published 9th September 2014(Updated(Update from July 2014)National Grid Electricity TransmissionPage 1
ContentsIntroduction . 3Scope and Status. 3Implementation Approach . 4Roles and Responsibilities . 5Government. 5National Grid (Implementation Co-ordinator) . 5National Grid (Delivery Body). 5Electricity Settlement Company (Settlement Body) . 6Elexon (including Capacity Market Settlement Agent) . 6Ofgem . 6Key Activities and Milestones . 7Annex A: EMR Capacity Market Implementation Plan, December 2013 – June 2014 . 15Annex B: EMR Capacity Market Implementation Plan, July 2014 – January 2015. 16Version1.01.11.2DescriptionOriginal version published by DECCUpdated version – to reflect final legislation andupdated implementation approachUpdated version – to reflect extension toPrequalification application window and knock-onimpact to all subsequent milestone dates. Also toreflect revised wording for credit cover activities.(changes from version 1.1 are shown in red textwithin the Key Activities and Milestones section)National Grid Electricity TransmissionDateDecember 2013July 2014September 2014
Capacity Market Implementation PlanIntroductionIn December 2013 the Government published the first Capacity MarketImplementation Plan in order to provide potential participants in the Capacity Marketwith details of the key Capacity Market implementation activities and milestones.The Implementation Plan was one of the outputs of the Electricity Market Reform(EMR) Collaborative Development Programme which took place between August2013 and December 2013 and was based on implementing the Capacity Market asset out in the “Electricity Market Reform: consultation on proposals for implementation”(the EMR October Consultation Document) and the accompanying draft legislationpublished in October 2013. In July 2014, an updated plan was published to reflect thefinal design of the Capacity Market Regulations/Rules and the latest implementationproposals from National Grid and other delivery partners.This September 2014 update provides the latest version of the plan and reflectschanges made to the timetable as a result of extending the prequalification window inorder to provide applicants with more time to consider the final Regulations/Rules andprepare their applications. The update also includes amended wording for credit coveractivities. National Grid is publishing this update as part of its role as ImplementationCo-ordinator for the Capacity Market.Scope and StatusThe updated timeline for the implementation of the Capacity Market is based on theGovernment’s response to the October 2013 consultation and the subsequentsecondary legislation/Rules which came into force on 1st August 2014. The plan bringstogether milestones from Government and each of its delivery partners. It is intendedto provide a high level overview of the steps involved in the implementation of theCapacity Market and the running of the first pre-qualification and auction process,such that industry participants have the clarity they require to plan and manage theirown implementation activities.Figure 1 provides an overview of the relative timings of capacity auctions and deliveryyears. Although this includes the proposed demand side response (DSR) specificauctions for context, this plan does not include any activities associated explicitly withthe implementation of the transitional arrangements for DSR capacity. Theimplementation plan is a summary plan and does not replace or replicate the detailedimplementation plans that Government, delivery partners and individual industryparticipants may need to produce to manage their respective implementationactivities.National Grid Electricity TransmissionPage 3
Capacity Market Implementation PlanImplementation ApproachThe first capacity auction will be held in December 2014. It will be open to all types ofeligible capacity and will award capacity agreements, which will come into effect inOctober 2018. This auction, 4 years ahead of delivery, is called a “T-4” auction. Thefirst year-ahead (T-1) auction will take place in late 2017 for capacity agreementswhich also come into effect in 2018. Figure 1 illustrates the relative timings of thestandard Capacity Market auctions, the DSR transitional arrangement auctions andthe associated delivery years.Figure 1 Overview of proposed capacity auctionsNational Grid Electricity TransmissionPage 4
Capacity Market Implementation PlanRoles and ResponsibilitiesA number of organisations will work together to implement the Capacity Market. Thissection focuses on these organisations’ roles in relation to the ‘implementation phase’covering the first pre-qualification and auction process.Government Overall responsibility for implementation of the EMR Programme including theCapacity MarketReporting to Ministers / communication of Ministers’ decisionsFinalising the design and implementing legislationEstablishing the Electricity Settlements Company (Capacity Market SettlementBody)Securing state aid clearanceAppointing the panel of technical expertsManaging updates to codes and licencesProducing the EMR Delivery Plan and annual updates to itManaging any future changes to regulationsNational Grid (Implementation Co-ordinator)National Grid will fulfil the role of ‘Implementation Co-ordinator’ for the CapacityMarket. This will involve: Owning and maintaining the Capacity Market Implementation Plan Co-ordinating implementation activities across delivery partners and potentialcapacity providers Engaging with potential capacity providers on implementation issues and theirreadiness to participate in the Capacity Market Collating, tracking and helping to resolve implementation issues Passing policy issues to Government when raised at implementation eventsNational Grid (Delivery Body)As the delivery body for the Capacity Market, National Grid will be responsible for: Procuring and implementing core systems to support the running of capacityauctions and the pre-qualification process, and the implementation andmaintenance of the capacity register Designing and implementing business processes to support capacity auctionsand pre-qualification, and producing supporting documentation/guides includingthe auction guidelines Designing and implementing business processes to support the managementof each delivery year, i.e. contract management, spot testingNational Grid Electricity TransmissionPage 5
Capacity Market Implementation Plan Implementing processes and systems and testing these with stakeholdersProducing annual capacity reports for Government, which will advise oncapacity requirements to meet the published reliability standardAppointing the Auction MonitorElectricity Settlements Company (Settlement Body) Established to provide ultimate accountability, governance and control of themonies collected and disbursed under the Capacity Market (Payment)Regulations.During the implementation phase, responsible for the design andimplementation of the processes and systems it needs to fulfil its role.Responsible for contracting a settlement agent to carry out the administrativefunctions associated with the collection and verification of bid bonds andcollateralElexon (including Capacity Market Settlement Services Provider) The settlement body will be ultimately accountable for the holding of bid bondsand collateral ahead of the 2014 auction. It is intended that the settlementagent (Elexon) will carry out the verification of bid bonds and collateral onbehalf of the settlement body.During the implementation phase, Elexon will also be responsible for thefollowing activities: Procuring settlement agent services and systems Managing changes to Balancing and Settlement Code (BSC) systems Drafting some changes to balancing and settlement documentation Designing and implementing payment related processes and systemsOfgem Designing, implementing and publishing processes for changes to CapacityMarket rulesModifying enforcement guidelines for EMR (if required)Handling disputes which have been escalated following the delivery bodydisputes processNational Grid Electricity TransmissionPage 6
Key Activities and elivery PlanpublishedPublish the final reliability standardand the methodology for thedemand curve in the delivery plan19th December2013Government2Publish draftCapacity MarketRules "changeprocess"Consultation on the draftgovernance and changemechanism for Capacity MarketRulesApril 2014Ofgem3Electricity capacitymodelling andanalysisModelling and analysis work toprovide recommendation on thetarget volume and the demandcurve for the T-4 auctionMarch – June2014Delivery Body Receipt of winter data Receipt of Government inputassumptions4"Informal" auctionguidelinesInitial publication (which will need tobe confirmed once secondarylegislation is in force) to include:1. Dates for pre-qualificationopening/closing/results and theprovisional auction date2. Details of pre-qualification ITsystems including the format forapplications3. Auction Parameters (inc demandcurve and target volume)4. De-rating factors5. Details of the Delivery Bodydecision review process30th June 2014Delivery Body IT systems Electricity Capacity modelling Auction parameters fromGovernmentNational Grid Electricity TransmissionDependencies
Activity/MilestoneDescriptionDateOwner5Offline applicantRegistration startsApplicants can submit offlineRegistration details via templatesprovided by the Delivery Bodyw/c 14th July2014Applicant/ IT systems testing completeDelivery Body6Provide access toDelivery Body prequalification ITsystemsProvide access and instructions toapplicants to enable bulk upload ofpre-qualification dataw/c 21st July2014Delivery Body IT systems7Legislation andcode/licencechanges in forceSecondary legislation comes intoforce (along with all directedcode/licence changes)1st August 2014 Government Parliamentary ectricity Settlements Companyfully operational1st August 2014 Government Electricity SettlementsCompany incorporated andbank accounts in place.9Publish finalCapacity MarketRules changeguidelinesPublish final guidelines on thegovernance and changemechanism for Capacity MarketRules.1st August 2014 Ofgem Consultation completion10Publish auctiondetermination andparametersConfirm that an auction is requiredand publish this confirmationalongside final auction parameters1st August 2014 Government Secondary legislation in force11Publish "Formal"auction guidelinesPublish final guidelines to reflectGovernment auction parameters1st August 2014 Delivery Body Secondary legislation in force Government publication ofauction parametersNational Grid Electricity TransmissionPage 8Dependencies
12Pre-qualificationwindow opensIT systems "active" and applicantssubmit formal registration and datasubmission4th August2014DeliveryBody/Applicants Secondary legislation in force IT systems13Pre-qualificationwindow closesLast date for applications to besubmitted5th September2014Applicants Secondary legislation in force IT systems14Publish Tier 2Publish guidelines on the tier 2disputes guidelines disputes processes.29th August2014Ofgem Consultation completion15Pre-qualificationresults day3rd October2014Delivery Body Secondary legislation in force Completion of pre-qualificationapplication assessments IT systemsInform applicants of the outcome ofassessment and issue conditionalpre-qualification certificates to all.Provide Government withaggregate de-rating capacity foreach category of applicant and anyrecommendation for adjusting thedemand curve (as a result of plantopting out whilst still operational)Update CM Register and shareinformation with Ofgem and Elexon16Reconsiderationrequest (Tier 1)window openOpening date for applicants to askthe Delivery Body to review its prequalification decision3rd October2014Applicants17Earliest date forposting collateralEarliest date that applicants canpost collateral with the ElectricitySettlements Company6th October2014ApplicantsNational Grid Electricity TransmissionPage 9 Pre-qualification results day
18Reconsiderationrequest (Tier 1)window closedClosing date for applicants to askthe Delivery Body to review its prequalification decision10th October2014Applicants 19Deadline forapplicants to postcredit cover withESCApplicants that receive a notice ofconditional pre-qualification fromthe Delivery Body must lodge creditcover in pre-qualification10th October2014Applicants Deadline is 5 business daysafter pre-qualification resultsday20Delivery Bodydecision review(Tier 1) completeApplicants notified of the DeliveryBody’s reconsidered decision (viareconsidered decision notice)17th October2014Delivery Body Any/all Delivery Body decisionreviews completeDeadline is 5 business daysafter pre-qualification resultsdayCapacity Register updatedGovernment notified of decisionreview outcome21Tier 2 disputesubmissionwindow opensOpening date for applicants to raisea dispute with Ofgem against thepre-qualification outcome17th October2014Applicants22Tier 2 disputewindow closesClosing date for applicants to raisea dispute with Ofgem against thepre-qualification outcome24th October2014Applicants23Publish updatedauction guidelinesPublish updated Auction27th OctoberParameters (as a result of opt outs). 2014Confirm status to conditionally prequalified applicants.National Grid Electricity Transmission Deadline is 5 working daysafter the Delivery Bodyreconsideration notice isissued/receivedDelivery Body Government update toDelivery Body on parametersPage 10
24Initial credit coververificationLatest date for ESC to notifyapplicants that have posted creditcover whether their credit cover hasbeen approved31st October2014ElectricitySettlementsCompany 25Initial notification of Latest date that applicants whocredit cover tohave been notified that their originalDelivery Bodycredit cover has been approvedmust notify the Delivery Body7th November2014Applicants Within 5 Working days of ESCnotifying applicants whethertheir credit cover has beenapproved Initial collateral verificationresults Collateral re-posting Delivery Body needs thisinformation 25 business daysbefore the auction startsDeadline forapplicants to repost credit cover toESCWithin 15 working days ofapplicants posting creditcoverLatest date that applicants whohave been notified that their originalcredit cover has not been approvedmust re-post credit cover for secondverification26Final credit coververificationLatest date for ESC to approveresubmitted credit cover11th November2014ElectricitySettlementsCompany27Enable IT auctionsystem access foruser trialsProvide auction IT system accessto all pre-qualified applicants toenable user trials (interactive,scripted mini-mock auctions usingdummy data)11th November2014Delivery Body National Grid Electricity TransmissionPage 11IT systems
28Tier 2 disputeprocess targetcompletion dateFollowing completion of tier 2disputes, inform appellants andDelivery Body of outcomes.21st November2014Ofgem Tier 2 disputes assessed anddecisions made wherepossible by 21st November29Final date forPlanning ConsentsubmissionFinal date for new build applicantsto submit Planning Consentevidence to the Delivery Body21st November2014Applicants Delivery Body providing Prequalification system access30Pre-qualificationconfirmationDelivery Body notifies new build24th Novemberapplicants that submitted late2014Planning Consents of their final prequalification status31Processunsuccessful tier 2dispute applicantsRemove IT systems access fromunsuccessful tier 2 disputeapplicants & update the CapacityRegister24th November2014Delivery Body Completed Tier 2 disputesconfirmed by Ofgem32Publish "Final"auction guidelinesand bidder detailsPublish final guidelines to include:25th November2014Delivery Body Government notification offinal auction parameters Completion of tier 2 disputesprocess and notification Results of collateralverification Must be published 15business days before theauctionFinal deadline forDelivery Body toconfirmprequalificationstatus forapplicantsrequiring creditcover1. Date and time the auction willstart;2. Notification of post-disputeidentity and status of prequalified CMUs;3. Any updates to AuctionParameters since October;4. Details of Auction MonitorNational Grid Electricity TransmissionDelivery Body Applicant submissionsPage 12
33Closing date forauction statusconfirmations toDelivery BodyLast date for applicants to submitconfirmations to the Delivery Body,including:2nd December2014Applicants Delivery Body providingappropriate system access34Provide finalauction accesscodesDelivery Body provides final auctionaccess codes to all confirmed, prequalified applicants2nd December2014Delivery Body Completion of Tier 2 disputes Receipt of all applicant auctionstatus confirmations35Submit all auctionstatus confirmationinformation toGovernmentDelivery Body collates all auctionstatus confirmations and submits toGovernment for assessment ofauction liquidity4th December2014Delivery Body Receipt of all applicantconfirmations36Run mock auctionRun mock auction with allconfirmed, pre-qualified applicants(interactive, scripted using realCMU data)8th December2014Delivery Body IT systems User Trials complete37Start auctionStart the first auction round16th December2014Delivery Body IT systems Publication of "Final" auctionguidelines and bidder details Auction monitor operational38Complete auctionAuction closes19th December2014Delivery Body Auction clearing1. Existing – Price Maker/Taker2. DSR – Size In/Opt out3. New/Refurbished – In/Opt out agreement lengthNational Grid Electricity TransmissionPage 13
Activity/MilestoneDescriptionDateOwner39Notify bidders whether, based onprovisional results, they have beenawarded a capacity agreement(with the details)19th December2014Delivery Body Auction closing (must benotified within 24 hours ofclosing)Notification ofprovisional auctionresultsDependenciesNotify Government and Ofgem ofthe provisional results40Auction monitorreportAuction monitor provides report onauction to Government23rd December2014Delivery Body Auction closing (must beprovided within 2 businessdays of closing)41Auction results dayPublish results of the auction tobidders, the auction monitor andother administrative parties5th January2015Delivery Body Auction closing (must bepublished within 8 businessdays of closing)42Issue capacityagreementsIssue agreements to successfulbiddersNo later than30th January2015Delivery Body Auction results day (must beissued within 20 businessdays of results day)National Grid Electricity TransmissionPage 14
EMR Capacity Market Implementation PlanVersion 1.2Capacity 2013Market Implementation PlanDecJan2014FebMarAprMayJunGovernmentAnalysing consultation responses, finalising policy and draft secondary legislationAnnex A: EMR CapacityMarketImplementation Plan, Dec 2013 – June 2014Royal assent toEnergy BillConsultationcloses1Delivery plan publishedGovernment response toconsultation publishedIncludes final reliability standard andmethodology for the demand curveCode and licence changesOfgemConsultation on Capacity Market Rules change processPublish draft Capacity MarketRules change guidelines2DeliveryBodyAuction IT systems design and buildTo provide recommendations on the targetvolume and the demand curve for the T-4auctionElectricity capacity modelling and analysisPre-qualification IT systems design and buildImplementation planningIncludes: Dates for pre-qualification opening / closing / results and the provisional auction date Details of pre-qualification IT systems including the format for applications Auction Parameters (including demand curve and target volume) De-rating factors Details of the National Grid disputes mentation planningElectricity Settlements Company setupKeyDECCDelivery bodyOfgemApplicantSettlement bodyNational Grid Electricity TransmissionPage 154Informal auctionguidelines
Capacity Market Implementation PlanAnnex B: EMR Capacity Market Implementation Plan, July 2014 – January 2015EMR Capacity Market Implementation PlanVersion 1.22014GovernmentJulAugSepOctNovDec01/08 Legislation and code / licence changes in7 force01/08 Publish auction determination and10 parametersOfgem901/08 Publish Capacity MarketRules change guidelines14Consider disputes29/08 Publish Tier 2disputes guidelines17/10 Decisionreviews completeand reconsiderationnotices issued05/09 Prequalificationwindow closesPre-qualification prep1204/08 Prequalificationwindow open13Assess applications15ReviewDecisions21/11 Tier 2 dispute process28 target completion date27/10 Publish23 updated auctionguidelines24/11 Processunsuccessfultier 2 disputeapplicants2003/10 Prequalificationresults day313204/12 Submit all auction35 status confirmations toGovernment25/11 Final Auction Guidelinespublished, finalprequalification status notified11/11 ProvideIT systemaccess for UserTrials2702/12 Provide auction access codes to34 confirmed pre-qualified bidders19/12 Complete37 Auction 38 AuctionApplicantCapacityMarketSettlementBody24/11 NotifyNew Build offinal preQ status 3021/07 Applicantaccess toDelivery Bodypre-qualificationIT systemsKeyDECCDelivery bodyOfgemApplicantSettlement bodyRequestApplication6 User Trials16 Review 18 21 Dispute 2203/1010/1017/1024/1017 Post19credit06/10 Earliest cover 10/10 Deadlinedate forsubmittingcredit cover01/08 Electricity8 Settlements CompanyoperationalNational Grid Electricity Transmission21/11 Finaldate for New 29Build to submitplanningconsentsParticipant User Trialsfor posting25credit cover07/11 Notify creditcover to DB /credit cover reposting deadlineVerify credit24cover31/10 Initialcredit coververification23/12 AuctionMonitor report40 submitted toGovernment16/12 StartAuctionParticipant User Trials14/07 Offlineapplicantregistrationstarts5JanConsider auctionstatus/outcomeUpdate auction parameters01/08 Publish "Formal" auction11 guidelinesDeliveryBody20153608/12 MockAuction3302/12 Closing Datefor auction statusconfirmation11/11 Final credit coververification26Page 16394105/01 AuctionResults Day19/12 Notificationof provisionalAuction results4230/01 latestdate to IssueCapacityAgreements
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Annex A: EMR Capacity Market Implementation Plan, December 2013 - June 2014.15 Annex B: EMR Capacity Market Implementation Plan, July 2014 - January 2015.16 Version Description Date 1.0 Original version published by DECC December 2013 1.1 Updated version - to reflect final legislation and updated implementation approach July 2014
