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.[1]
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.[1]
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]
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.[1] The government confirmed the clearing price of £60/kW/year, highlighting the consistent market value placed on firm capacity.[3] 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.[3]
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.
