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<p>The Capacity Market is at the heart of the Government’s plans for a reliable, flexible
electricity system. It will secure the capacity required to meet peak demand in a
range of scenarios through auctions held four- and one-year ahead of delivery.</p><p>The
design of the Capacity Market drives fierce competition. Existing and new resources,
of all technology types which are not in receipt of another subsidy, compete together.
A mix of new-build projects came through in the last main capacity auction in December
2016, with significant innovation such as demand-side response and battery storage
winning agreements alongside more traditional gas generation projects.</p><p>Other
measures being taken to broaden the UK’s electricity generation base are the deployment
of new nuclear generation (starting with Hinkley Point C).</p><p>In September, we
announced the results of the second Contracts for Difference auction round which secured
an additional 3.2 Giga Watts of new offshore wind capacity to be built in the early
2020’s.</p><p>Building on this, we announced our Clean Growth Strategy in October,
where we committed a further £557 million for future Contracts for Difference allocation
rounds with the next auction planned for Spring 2019.</p>
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