Electricity Storage Network responses to Capacity Market consultations

The consultation on 2026 prequalification puts forward significant price-related reforms, including proposing a new category that would receive higher CM payments. Our response argues that raising price caps for selected technologies won’t, on its own, improve security of supply. The Capacity Market works best when it remains technology neutral and allows providers to compete on performance. Instead, the government should focus on defining system needs and improving delivery incentives, while ensuring any higher payments don’t support unabated high-carbon gas plants.

We strongly support the proposal to let battery storage projects permanently self-nominate their connection capacity. This flexibility helps developers optimise duration, cost and reliability. However, introducing a floor on self-derating would add unnecessary complexity and could restrict innovation as longer-duration designs emerge.

Key recommendations:

• Define system needs through clear performance requirements, such as duration and stress-event deliverability.
• Keep the Capacity Market technology neutral so all capable technologies can compete on equal terms.
• If implemented, apply strict emissions and running-hour limits to any plant receiving higher CM payments.
• Allow battery storage to permanently self-nominate connection capacity, while avoiding a floor on self-derating.

Turning to the government’s proposals on locational changes, ESN members raised concerns about removing the Change of Location provision entirely. Some developers use this flexibility to manage delivery risk across their portfolios, for example due to supply chain or grid connection delays. A more proportionate approach would be to limit transfers to new-build assets rather than removing the mechanism altogether. Read our response here.

Key recommendations:

• Retain flexibility for Change of Location between new-build CMUs.
• Prevent transfers from new-build to existing or refurbished sites to maintain agreement integrity.
• Avoid retrospective changes for new-build projects as some participants will have taken CM agreements on the basis that this option is permitted.

Storage plays a vital role in delivering a secure, low-carbon system, yet has received only a small share of Capacity Market support to date. ESN will continue to work with our members and the government to ensure CM reforms uphold a fair, effective and technology-neutral Capacity Market that supports innovation and keeps costs down for consumers.