Citation, commencement and extent

1.—(1) These Regulations may be cited as the Electricity Capacity (Amendment and Transitional Provision) Regulations 2026.

(2) These Regulations come into force on the day after the day on which they are made.

(3) These Regulations extend to England and Wales and Scotland.

Amendments to the Electricity Capacity Regulations 2014

2.—(1) The Electricity Capacity Regulations 2014(2) are amended as set out in Schedule 1.

(2) Any reference in that Schedule to a numbered regulation is to the regulation so numbered in those regulations.

Amendments to the Electricity Capacity (Supplier Payment etc.) Regulations 2014

3.—(1) The Electricity Capacity (Supplier Payment etc.) Regulations 2014(3) are amended as set out in Schedule 2.

(2) Any reference in that Schedule to a numbered regulation is to the regulation so numbered in those regulations.

Amendments to the Electricity Capacity (No. 1) Regulations 2019

4.—(1) The Electricity Capacity (No. 1) Regulations 2019(4) are amended as set out in Schedule 3.

(2) Any reference in that Schedule to a numbered regulation is to the regulation so numbered in those regulations.

Schedules

Regulation 2

Schedule 1 Amendments to the Electricity Capacity Regulations 2014

Amendments to regulation 2

1. In regulation 2 (interpretation) in paragraph (1)—

(a)for the definition of “auction clearing price”, substitute—

““auction clearing price” means, in relation to a capacity auction, the price per MW which, subject to any provision for adjustment of capacity payments for inflation, is determined by the capacity auction to be the price at which capacity payments are payable in respect of capacity committed CMUs awarded a capacity obligation in that capacity auction;”; and

(b)in the definition of “TFx” for “5” substitute “9”.

Amendments to regulation 16

2. In regulation 16 (excluded capacity: low carbon support scheme CMUs)—

(a)for paragraph (2), substitute—

“(2) The Delivery Body must not prequalify a CMU if, in respect of the generating station that comprises or includes the CMU—

(a)the CFD counterparty has made an offer of a direct award CFD and—

(i)the CFD counterparty and an eligible generator have entered into that CFD;

(ii)that CFD has not expired or been terminated; and

(iii)the applicant does not provide a non-support confirmation by the close of the prequalification window; or

(b)the CFD counterparty has made an offer of an allocation round CFD and—

(i)an eligible generator has entered into the CFD; and

(ii)that CFD has not expired or been terminated.”;

(b)in paragraph (2A), for “(2)(a)(ii)” substitute “(2)(b)(i)”;

(c)in paragraph (4)—

(i)before the definition of “co-firing CMU”, insert—

““allocation round” means an allocation round established by the Secretary of State under regulation 4 of the Contracts for Difference (Allocation) Regulations 2014(5);

“allocation round CFD” means a CFD offered under section 14(1) of the Act (CFD notification: offer to contract on standard terms) and regulation 10(1) of the Contracts for Difference (Standard Terms) Regulations 2014(6) (offer to contract) following an allocation round;”;

(ii)after the definition of “co-firing CMU”, insert—

““direct award CFD” means a CFD offered by the CFD counterparty following a direction given by the Secretary of State under section 10(1) of the Act (direction to offer to contract);”;

(iii)after the definition of “FIT Order”, insert—

““generation counterparty payment” has the meaning given in regulation 4(2) of the Contracts for Difference (Electricity Supplier Obligations) Regulations 2014(7);

“generation party payment” has the meaning given in regulation 4(2) of the Contracts for Difference (Electricity Supplier Obligations) Regulations 2014;”;

(iv)in the definition of “non-support confirmation”—

(aa)at the end of sub-paragraph (a), omit “or”;

(bb)at the end of sub-paragraph (b), insert “or”;

(cc)after sub-paragraph (b), insert—

“(c)that, in respect of a direct award CFD, the applicant will not receive a generation counterparty payment or be obliged to make a generation party payment in respect of the relevant CMU for any of the delivery period;”.

Amendment to regulation 21

3. In regulation 21 (auction guidelines), in paragraph (1) after “start of the prequalification window,” insert “and as soon as reasonably practicable following any extension to the prequalification window made by the Delivery Body or Secretary of State under the capacity market rules,”.

Amendments to regulation 32

4. In regulation 32 (termination fee rates)—

(a)in paragraph (1), in the definition of “TFx_rate” for “5” substitute “9”; and

(b)in paragraph (2), after “TF5_rate is £35,000/MW” insert—

• “TF6_rate is £6,500/MW;

• TF7_rate is £13,000/MW;

• TF8_rate is £19,500/MW;

• TF9_rate is £45,500/MW.”.

Amendment to regulation 34

5. In regulation 34 (termination of capacity agreements: CFDs and ROO conversions), in paragraph (3) in the definition of “CFD transfer notice” for “for a CFD” substitute “for an allocation round CFD”.

Amendments to regulation 43

6. In regulation 43 (termination fees)—

(a)in paragraph (3), for “5” substitute “9”; and

(b)in paragraph (5), in the definition of “TFx_rate” for “5” substitute “9”.

Amendments to regulation 51

7. In regulation 51 (withholding credit payments to capacity providers)—

(a)in paragraph (1)—

(i)at the end of sub-paragraph (a), omit “or”;

(ii)after sub-paragraph (a), insert—

“(aa)C is issued a termination notice in relation to a CMU (“CMU i”) for an insolvency termination event (a “relevant termination notice”); or”;

(iii)in sub-paragraph (b), at the start, insert, “other than when sub-paragraph (aa) applies,”;

(b)in paragraph (2)—

(i)at the end of sub-paragraph (a), omit “and”;

(ii)after sub-paragraph (a), insert—

“(aa)where a relevant termination notice has been issued, no monthly capacity payment is paid in respect of the relevant CMU from the date the relevant termination notice is issued, and credit is withheld in accordance with paragraph (2A); and”;

(c)after paragraph (2), insert—

“(2A) Where C is issued a relevant termination notice, the Settlement Body must withhold credit in accordance with the formula—

(2B) The Settlement Body is not required to withhold credit from C under paragraph (1)(aa) if the relevant termination notice is withdrawn.

(2C) Paragraph (1)(aa) applies to the termination of a transferred part as it applies to the termination of a capacity agreement.”.

(d)for paragraph (3), substitute—

“(3) In this regulation—

“data default notice” has the meaning given in regulation 37(1);

“insolvency termination event” and“termination notice” have the meanings given in the Rules.”.

Amendments to regulation 52

8. In regulation 52 (payment of withheld credit)—

(a)in paragraph (2), for “51(1)(b)” substitute “51(1)(aa) or 51(1)(b)”; and

(b)after paragraph (3), insert—

“(4) Where credit is withheld from C under under regulation 51(1)(aa) and a relevant termination notice is subsequently withdrawn, the Settlement Body must pay the withheld credit in accordance with the formula—

(5) Paragraph (4) applies to the termination of a transferred part as it applies to the termination of a capacity agreement.

(6) In this regulation, “relevant termination notice” has the meaning given in regulation 51(1)(aa).”.

Amendment to regulation 53

9. In regulation 53(3), in the definition of “the required amount”, for “59(1) or (4)” substitute “59(1), (4) or (5A)”.

Amendment to regulation 59

10. In regulation 59 (requirement to provide applicant credit cover)—

(a)in paragraph (2)—

(i)in sub-paragraph (a)(i), for “£5,000” substitute “£6,500”;

(ii)in sub-paragraph (a)(ia), for “£10,000”, substitute “£13,000”;

(iii)in sub-paragraph (a)(ii), for “£10,000”, substitute “£13,000”;

(b)in paragraph (2C), for “£5,000”, substitute “£6,500”;

(c)for paragraph (4), substitute—

“(4) The applicant credit cover provided under paragraph (1) in respect of a new build CMU must—

(a)where 12 months have elapsed after auction results day and where an applicant has not met the financial commitment milestone in accordance with the Rules, be increased by the capacity provider to an amount equal to £19,500 per MW of de-rated capacity; and

(b)where subsequently the applicant meets the financial commitment milestone in accordance with the Rules, be reduced to an amount equal to £13,000 per MW of de-rated capacity.”;

(d) after paragraph (5), insert—

“(5A) Where CMU i is not an unproven demand side response CMU, the applicant credit cover provided under paragraph (1) in respect of CMU i must, where notice requiring an increase in applicant credit cover is given to a capacity provider by the Delivery Body under the Rules, be increased by the capacity provider to an amount equal to £45,500 per MW of de-rated capacity.

(5B) The increased credit cover required to be provided under paragraph (5A) must be provided within 15 working days of notice being given by the Delivery Body.”.

New regulation 59A

11. After regulation 59 (requirement to provide applicant credit cover), insert—

Requirement to provide applicant credit cover: Transitional provision

59A.—(1) This regulation applies to applications made before the coming into force of the Electricity Capacity (Amendment and Transitional Provision) Regulations 2026.

(2) Where this regulation applies, regulation 59 applies as if—

(a)in paragraph (2)—

(i)in sub-paragraph (a)(i), for “£6,500” there were substituted “£5,000”;

(ii)in sub-paragraph (a)(ia), for “£13,000”, there were substituted “£10,000”;

(iii)in sub-paragraph (a)(ii), for “£13,000”, there were substituted “£10,000”;

(b)in paragraph (2C), for “£6,500”, there were substituted “£5,000”; and

(c)for paragraph (4), there were substituted—

“(4) In circumstances specified in capacity market rules, the applicant credit cover provided under paragraph (1) in respect of a new build CMU must, where twelve months have elapsed after auction results day, be increased by the capacity provider to an amount equal to £15,000 per MW of de-rated capacity.”.”.

Amendment to regulation 60

12. In regulation 60 (credit obligation period)—

(a)in paragraph (1), for sub-paragraph (g) substitute—

“(g)where CMU i is not an unproven demand side response CMU, A has fully discharged all the requirements in capacity market rules against which its applicant credit cover was secured, and which a failure to meet would either—

(i)result in its capacity agreement being terminated under capacity market rules; or

(ii)prevent A from being entitled under capacity market rules to capacity payments in respect of CMU i;”;

(b)in paragraph (2)—

(i)at the end of sub-paragraph (a), insert “; or”; and

(ii)immediately after sub-paragraph (b)(8) but before the words at the end, insert—

“(c)where CMU i is awarded a capacity obligation following an application made after the coming into force of the Electricity Capacity (Amendment and Transitional Provision) Regulations 2026, in an amount equal to £6,500 per MW of the amount of the de-rated capacity of CMU i,”.

Regulation 3

Schedule 2 Amendments to the Electricity Capacity (Supplier Payment etc.) Regulations 2014

Amendments to regulation 18

1. In regulation 18 (reconciliation runs)—

(a)in paragraph (1), after “subject to paragraphs”, insert “(1A),”;

(b)after paragraph (1), insert—

“(1A) The Authority may, where it considers that the periods specified in paragraph (1) should not be applied, direct the Settlement Body to carry out—

(a)scheduled monthly reconciliation runs to commence during each period which begins with the day after the last day of month M and ends with the day which is 7 working days, 30 working days and 84 working days after the last day of month M; and

(b)scheduled annual reconciliation runs to commence during each period which begins with the day after the last day of year X and ends with the day which is 7 working days, 30 working days and 84 working days after the last day of year X.”;

(c)after paragraph (3), insert—

“(3A) If the Authority makes a direction under paragraph (1A) after the Settlement Body publishes a timetable under paragraph (3), the Settlement Body must, in accordance with that direction, reschedule the monthly reconciliation runs or annual reconciliation runs, and as soon as possible—

(a)set a timetable for—

(i)the rescheduled monthly reconciliation runs for each remaining month of the delivery year containing month M; and

(ii)the rescheduled annual reconciliation runs for year X; and

(b)publish that timetable.”;

(d)in paragraph (5), after “(3)”, insert “, (3A)”.

Amendment to regulation 26

2. In regulation 26(1)(a)(ii) for “regulation 59(1)”, substitute “regulations 59(1), (4) or (5A)”.

Regulation 4

Schedule 3 Amendments to the Electricity Capacity (No. 1) Regulations 2019

Revocation of Chapter 1 of Part 3

1. In the Electricity Capacity (No. 1) Regulations 2019, omit Chapter 1 (supplier charge payments during standstill period) of Part 3 (payments administered by the settlement body).