Author: John Steele, principal engineer, Natural Power
The Capacity Market is a UK electricity market mechanism designed to ensure there is enough reliable electricity capacity available to meet demand, especially during periods of system stress. It provides payments to eligible capacity providers—such as generators, battery storage operators, demand-side response providers, and interconnectors—in return for committing to deliver electricity or reduce demand when needed.
This is a separate mechanism from Contracts for Difference (CfD). Using a fire service analogy, the Capacity Market pays fire stations to keep enough fire engines ready and available, while CfD pays modern low-carbon fire engines for the fires they actually attend. Together, they work hand-in-hand: the Capacity Market ensures there are enough fire engines when needed, and CfD encourages investment in cleaner, more efficient ones.
The Capacity Market is built on detailed rules, strict milestones, and ongoing delivery obligations. Failure to comply—whether during prequalification, commissioning, or delivery—can lead to penalties, termination, or loss of revenue.
At Natural Power, we provide independent technical expert support to help Capacity Market participants meet their obligations, manage risk, and protect long‑term value - without conflicts of interest.
Our role is simple: to provide technically robust, regulator‑grade assurance that can be relied upon.
We provide independent, technical support focused on the two most commercially critical Capacity Market compliance thresholds: Financial Commitment and Substantial Completion.
Financial commitment milestone
Meeting the Financial Commitment Milestone requires more than paperwork—it requires credible technical substantiation that the project is genuinely committed and deliverable.
We provide technical assurance to support:
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Review of the CMU scope, generating technology class, connection capacity basis, construction plan and delivery strategy against the relevant prequalification requirements
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Assessment of key contracts, orders, funding evidence and capital expenditure commitments supporting the Financial Commitment Milestone
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Technical review of project schedules, construction milestones, critical path assumptions and delivery risks, including alignment with the required milestone timetable
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Identification of gaps between declared project spend, commercial commitments, construction plans and the technical evidence required to support compliance
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Independent technical assurance to support accurate, complete and defensible milestone submissions before declaration
Our involvement helps ensure Financial Commitment declarations are accurate, proportionate, and defensible, reducing exposure to termination risk or retrospective challenge.
Substantial completion compliance & assurance
Substantial Completion represents the point at which Capacity Market obligations move from development risk to delivery risk. Incorrect or premature declarations can have immediate and lasting consequences.
We support participants through:
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Independent assessment of whether the CMU is operational and has achieved the required level of de-rated capacity against the Substantial Completion criteria
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Review of commissioning status, operational notices, metering assessments, metering test evidence and completion records required to demonstrate readiness
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Assessment of remaining works, network connection constraints, operational limitations and residual risks that may affect milestone achievement or Capacity Agreement start dates
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Technical challenge of assumptions around physical generating capacity, configuration, availability, performance and the ability to meet Capacity Obligations
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Preparation and review of clear, auditable technical evidence packs to support robust submissions, regulatory scrutiny and future compliance assurance
We provide clear, independent judgement on whether Substantial Completion has genuinely been achieved—aligned with rules, guidance, and precedent.
Why independence matters at these milestones
Both Financial Commitment and Substantial Completion are points of heightened scrutiny, where optimistic interpretation can quickly become regulatory exposure.
As independent technical experts, we provide:
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Objective assessments, free from delivery or contractual bias
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Judgement grounded in rules, evidence, and operational reality
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Documentation that stands up to audit, dispute, or enforcement review
We support informed decision‑making—helping clients move forward with confidence, not assumption.