UK T-4 auction paves the way to nearly 7 GW of new BESS capacity by 2028

The National Energy System Operator (NESO) has released the provisional T-4 Capacity Market Auction results for delivery in 2028/2029 which targeted 43.7 GW.

The T-4 auction concluded on March 11, and 43.1 GW was procured across 669 units. Existing tech made up around 40 GW, or 81% of the capacity enetering the action, meaning that new build capacity, which can come at a higher price, was needed to close the gap.

The auction cleared at a price of GBP 60/kW/year ($84/kW/year), down from last year’s all time high clearing price of GBP 65/kW/year. The procurement exercise came at a cost of around GBP 4 billion, up from the last year’s GBP 3.6 billion.

A total of 111 battery energy storage system (BESS) units were awarded contracts totaling around 1.8 GW of capacity, which is two times the volume procured last year.

All this capacity was new build with the exception of around 25 MW, including 21 MW of capacity awarded to one-hour assets and 4.4 MW awarded to two-hour assets.

Around 25% of BESS units had a duration of more than three hours. Namely, the strong clearing price helped 880 MW of new battery storage units with durations of four hours and above secure agreements, up from 123 MW in last year’s auction and including around 240 MW awarded to eight-hour systems.

Four-hour duration BESS was derated to 41.74% in the auction, versus 83.78% for eight-hour duration batteries. This reflects the percentage of gross installed capacity considered to be firm by NESO, which means that gross capacity additions from awarded projects will be considerably higher.

As a result, nearly 7 GW of BESS projects have ensured 15-year agreements and are penciled in to come online by winter 2028.

BESS represented 16.6% of all the total awarded capacity in the March 11 auction. Pumped storage was awarded 3.7% of the total capacity, amounting to 1.6 GW across eight units. Compressed air storage amounted to 0.07% of the awarded capacity or 31 MW. Around 1.7 GW of demand side response (DSR) units attributed 4.1% of the awarded capacity.

For new build generation units, 0.8 MW of capacity was procured for one-hour assets, 80.7 MW was procured for 1.5-hour assets, while 781 MW was procured for two-hour assets.

Longer duration storage projects have increased their share in the T-4 Capacity Market Auction, with a total of 404 MW of capacity secured for four-hour duration projects, 189 MW for five-hour duration projects, 31 MW for six-hour projects, and almost 240 MW secured for eight-hour duration projects.

The growing role of BESS

Of notable awards, agreements were awarded to 292 MW of derated capacity at Fidra Energy’s 1.4 GW/3.1 GWh Thrope Marsh site in Yorkshire, one of the largest BESS projects in Europe and the largest one in the UK, and 104 MW at its 500 MW/1.1 GWh West Burton C BESS project in Nottinghamshire. Both projects are expected to become operational in 2027.

Chris Elder, Fidra Energy’s chief executive officer, said: “The Capacity Market Auction is a key part of the UK’s energy market and the revenue certainties it provides give renewable generation and storage companies the confidence to invest in the UK market. Securing a record-breaking capacity market award for new build battery energy storage projects is a proud moment for us, and a testament to the strength of the UK’s BESS market.”

Walid Mouawad, managing director and co-head of energy transition at institutional investor EIG, which provides financing for Fidra Energy, added: “Fidra’s success in the Capacity Market Auction is a testament to the growing role of large-scale battery storage in the UK’s energy transition.

“These projects will provide critical flexibility to the grid, ensuring a stable and reliable power supply as renewable generation expands. EIG is proud to support the development of these transformative assets, reinforcing our commitment to advancing the UK’s clean energy future.”

T-1 procurement

T-4 auctions – Britain’s key procurement exercises – are usually held about four years in advance of the delivery date. Contracts for up to 15 years are available for new-build capacity in the auctions, while existing capacity can only secure one-year contracts.

Other auctions for a smaller amount of capacity, the so-called T-1 auctions, are usually held a year before delivery, with only one-year contracts up for grabs.

On March 5, 2025, NESO published the provisional results of the T-1 Capacity Market auction for 2025/26. The procurement cleared at GBP 20/kW/year, which was the lowest clearing price in five years. A total of 7.9 GW was procured across 246 units. 

BESS won contract for a record 726 MW of derated capacity, across 78 units, making up 9.15% of total awarded capacity. This was 10% more than the previous record set in 2024/25.