The UK's T-4 capacity market auction awarded approximately 1.8 GW of new-build battery energy storage system (BESS) agreements for the 2028-29 delivery year at a clearing price of £60/kW/year, accounting for over 80% of new-build awards in this round. The outcome signals a notable shift in grid-scale storage economics, emphasizing reliability and operational flexibility. These figures were reported by S&P Global and confirmed by government data.1Batteries dominate newbuild agreements in UK's T-4 capacity market auction | S&P Global
Background
The UK's capacity market operates through T-4 auctions, which secure capacity four years in advance, and T-1 auctions, which supplement capacity one year ahead. The latest T-4 auction targeted the 2028-29 delivery year, offering long-term contracts to support investment in dispatchable assets. The £60/kW/year clearing price was slightly below last year's record high but remained well above historical levels, reinforcing robust revenue forecasts for battery storage developers.1Batteries dominate newbuild agreements in UK's T-4 capacity market auction | S&P Global
Battery storage has become increasingly prominent in recent auctions. In the previous T-4 auction for 2024-25, battery storage accounted for the largest portion of multi-year agreements-1.8 GW-with 97% of that capacity awarded 15-year contracts. This trend reflects sustained confidence in long-term battery revenue streams.2| Annual Report on the Operation of the Capacity Market in 2024/25 | | | | | | |
Details
Battery projects secured 1.8 GW of new-build capacity under 15-year agreements, representing the largest share in the latest T-4 auction. S&P Global indicated this volume comprised more than 80% of all new-build awards.1Batteries dominate newbuild agreements in UK's T-4 capacity market auction | S&P Global The government confirmed the clearing price of £60/kW/year, highlighting the consistent market value placed on firm capacity.3Contracts for Difference Compared with other technologies, battery storage secured both the largest scale and longest contract durations. Other awards in this round included gas, nuclear, interconnectors, demand-side response (DSR), and pumped hydro. However, battery storage dominated in terms of awarded capacity and contract length.3Contracts for Difference
Outlook
These long-term agreements provide developers with improved financing options and clearer project timelines, principally due to the security of 15-year contracts. The high clearing price and volume signal that BESS is set to play a growing role in ensuring grid reliability as renewable integration intensifies. As a result, investment may increasingly flow toward markets supporting long-duration revenue structures, both across Europe's storage corridors and in North America where similar capacity mechanisms may emerge.
