The UK’s dual capacity markets

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There is an acute and increasing capacity shortage in the UK power market caused by the retirement of older gas and coal plants. This is being driven by ongoing weakness in thermal generation margins, due in part to increasing volumes of renewable output.

In response to security of supply concerns, the UK government introduced a capacity market in 2014. The aim of this intervention was to provide a reliable stream of income to support the flexible thermal capacity required to backup intermittent renewable output - http://www.timera-energy.com/the-uks-dual-capacity-markets/

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Note added at 4 hrs (2016-06-16 01:14:20 GMT)
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However, no such argument exists for dual capacity-energy markets like the WEM. The combination of energy and capacity payments will, in normal times, result in the optimal mix of generation with all generators earning normal profits - https://www.finance.wa.gov.au/cms/uploadedFiles/Public_Utili...

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