Capacity Market Levy

The Capacity Market is the government's mechanism for ensuring there's always enough electricity generation available to meet peak demand, even during unexpected events like cold snaps or power station failures. Providers (generators, storage facilities, and demand response services) bid in annual auctions to be available during "stress events" when the system is under pressure.

The levy on electricity bills funds these capacity payments. When you pay the Capacity Market charge, you're contributing to a national insurance policy against power shortages. The rate varies based on auction results and how much capacity has been secured.

Key facts:

• Auctions held 4 years and 1 year ahead of each "delivery year" (October to September)
• Delivery year runs October to September (not April to March)
• Primarily applies to half-hourly metered customers (Profile Classes 00, 05-08)
• Clearing prices have risen from ~£6-8/kW (2017-18) to over £60/kW recently
• Includes main obligation plus small Settlement Costs Levy for administration

This charge primarily applies to half-hourly metered customers (typically larger businesses). The levy is usually shown separately on business electricity bills or included in third-party charges.