Capacity Market Notices explained

Capacity Market Notices explained

We explore all you need to know about Capacity Market Notices (CMNs).

What is a Capacity Market Notice?

A Capacity Market Notice (CMN) is a signal from the system operator, National Grid, of a possible shortfall in electricity supply.

By consistent monitoring of supply margins within the electricity system, National Grid estimates when there may not be enough generation to meet expected demand on the transmission grid at that particular time and issues a notice.

The notice does not require specific action but simply indicates that the risk of a System Stress Event is higher than under normal circumstances.

How is it issued?

National Grid communicates CMNs automatically via its website and the notice must be issued at least four hours ahead of time. The UK Government has set a trigger for a CMN that the level of available generation is within 500MW of National Grid’s requirement to meet demand.

If this is the case, the CMN will be issued detailing that it is in response to the ‘Margin below threshold set out in Capacity Market Rules’.

Notices can also be issued as a ‘Demand Reduction Instruction’ or ‘Low Frequency Disconnection’.

The CMN does not indicate that Capacity Market participants should take specific action. Notices in response to margins below a given threshold are calculated and issued automatically and will be updated by industry participants leading up to the relevant time.

System margins will then be calculated for all settlement periods for the next four hours. If in such time the expected system rises more than 500MW above the forecast demand, than the CMN will be cancelled and communicated online.

What is contained within a Capacity Market Notice?

A CMN consists of five distinctive points:

  1. The start time of the Capacity Market Notice (four hours ahead)
  2. The circumstance that has triggered the Capacity Market Notice, being one of the following;
    • Margin below threshold set out in Capacity Market Rules (based on data provided to the System Operator)
    • Demand Reduction Instruction
    • Low Frequency Disconnection
  1. Transmission Demand and Operating Margin (MW)
  2. Aggregate Capacity of BM Units (Generating assets) expected (MW)
  3. Additional Capacity (MW)

How do you respond to a Capacity Market Notice?

It is up to the specific market participant as to how they respond to a CMN. There is no requirement to respond to a CMN under the rules of the Capacity Market. Respondents are only required to increase generation during a System Stress Event. A CMN only acts as an indication that the likelihood of a System Stress Event is higher than normal.

In the event of a CMN being issued it is recommended that industry participants make themselves aware of other operational information available to the industry closer to the time the notice is active from.

What is a System Stress Event?

A System Stress Event highlights a national shortage of electricity generation. It occurs only when:

  • A Demand Control Instruction has been issued, and;
  • The Demand Control event has been confirmed – after post-event analysis carried out by National Grid – to have been caused by a shortfall in electricity supply.

What do you need to do during a System Stress Event?

During a System Stress Event, a Capacity Market participant must deliver their agreed generation as per the Capacity Market Rules. The terms of the ‘Adjusted Load Following Capacity Obligation’ is determined in accordance with the Capacity Market rules participants agreed to.

When is a System Stress Event needed?

Following the issue of a Demand Control Instruction, National Grid will undergo a series of checks:

  • The Demand Control event lasted for a period longer than 15 minutes.
  • The volume of Demand Control instructed was greater than the volume of generation curtailed by National Grid in the same Settlement Periods.
  • The Demand Control event was not resultant from faults on the electricity transmission or distribution networks.

If the above criteria is met following the analysis then a System Stress Event will be communicated via National Grid’s dedicated Capacity Market website

There is no guarantee that a Demand Control Instruction will lead to a System Stress Event. Analysis on the Demand Control Instruction is normally completed within a few days. However, this may be extended if additional information is required.

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Ross Moffat

Posted by on Thursday, the 14. December at 14.33

Ross Moffat has been a part of the Market Intelligence team at Utilitywise since early 2014. His responsibilities include delivering Market Intelligence reports to clients and managing the Utility Insights Twitter account. Ross has a first class Honours degree in Business and Marketing from the University of Stirling.