The Capacity Market Levy for Winter 2026/27: How the Peak Charge Is Calculated and What It Costs Your Clients

How the charge is built

The Capacity Market (CM) pays generators, storage and demand side response for being available when the system is tight. Suppliers fund it, and the way suppliers are billed drives everything your clients see on their invoices.

EMR Settlement Limited (EMRS) allocates the cost by each supplier's share of Chargeable Demand during periods of high demand, defined as 16:00 to 19:00 on working days in November, December, January and February. Chargeable Demand is gross metered demand minus exempt volumes, and the market share basis moved from gross demand to Chargeable Demand from the 2024/25 Delivery Year onwards (EMRS G12, EMRS G2).

Two consequences follow. Consumption outside that window carries no CM cost at all in the settlement mechanism, and a site's exposure is set by roughly 246 hours of the year rather than 8,760. For winter 2026/27 the window contains 82 working days once Christmas Day, the substitute Boxing Day holiday on 28 December 2026 and New Year's Day are removed: 21 days in November, 21 in December, 20 in January and 20 in February.

What the 2026/27 auctions imply in p/kWh

Capacity for the 2026/27 Delivery Year was bought in two stages. The T-4 auction held in February 2023 cleared at £63/kW/year, an all-time high at the time, against an adjusted de-rated target of 43.9GW (EnAppSys). The top-up T-1 auction ran in March 2026 and cleared far lower, at £5.00/kW/year for 7.2GW de-rated, the weakest T-1 result since 2020 (Energy UK, Drax).

That cheap T-1 is cold comfort. It adds only about £36m, while the T-4 leg alone points to capacity payments in the region of £2.7bn, before legacy multi-year agreements and settlement costs. The total is spread across the 246 peak-window hours. GB chargeable demand in those hours sits broadly in the high 30s of GW, giving something like 9TWh of chargeable volume.

Divide one by the other and the implied levy is roughly £250 to £300 per peak-window MWh, so 25p to 30p per peak kWh. Treat that as an estimate: each supplier's own rate depends on its forecast, its customer mix and where reconciliation lands. For a site with a flat-ish weekday profile, it works out near 0.8p/kWh averaged across total annual consumption, which is why CM now sits among the larger non-commodity lines.

The 2026/27 timetable

• Delivery Year: 1 October 2026 to 30 September 2027.
• Credit cover: EMRS published the Credit Cover and Supplier Charge schedule on 31 July 2026, with the first lodgement deadline for October 2026 at 17:00 on 15 September 2026 (EMRS).
• Monthly charging: EMRS invoices suppliers monthly through the Delivery Year, initially using forecast demand (EMRS G15).
• Reconciliation: once actual metered data is available the calculation is redone, and revised payments correcting the forecast period run from May to September 2027 (EMRS WP1).

Money collected from your client between October 2026 and February 2027 is therefore based on a forecast. The true-up arrives in mid to late 2027, which matters enormously when you compare contract types.

Estimating a client's exposure from half-hourly data

Pull 12 months of HH data and run four steps.

• Filter to working days in November to February, then to settlement periods 33 to 38 inclusive (16:00 to 19:00).
• Sum the kWh in those periods. That is the peak-window volume.
• Multiply by your CM rate assumption, using the supplier's published figure if they will give it, otherwise £250 to £300/MWh.
• Divide the result by total annual kWh to get the blended p/kWh, which is the number to compare against quoted CM line items.

Worked example. A single-site manufacturer uses 500,000 kWh a year, HH metered on LV, operating 08:00 to 18:00 weekdays. Average demand across the peak window is 60kW. Peak-window volume is 60kW x 246 hours = 14.76 MWh. At £280/MWh the CM charge is about £4,130 for the year, equal to 0.83p/kWh across total consumption. A quote showing CM at 0.35p/kWh for this profile is either using a stale rate or absorbing risk elsewhere in the price.

What shifting load out of 16:00-19:00 is really worth

Suppose a client takes 20kW off the window by moving a shift start or discharging a battery.

• Capacity Market: 20kW x 246 hours = 4.92 MWh avoided, saving roughly £1,380 a year.
• DUoS red band: red applies on weekdays all year, typically 16:00 to 19:00 or 16:30 to 19:00 depending on DNO and voltage, so around 750 hours. At an illustrative LV red rate of 9p/kWh, 15 MWh avoided is about £1,350 a year. Check your DNO's published CDCM charging statement for the exact band times and rates; they vary widely, and HV sites see much lower red rates.
• TNUoS: since the Targeted Charging Review, the HH demand residual is a fixed daily charge set by a site's historic capacity band, so it does not respond to peak avoidance. Only the locational demand tariff is still triad-based, and it is modest in most zones and negative in parts of Scotland. Triad chasing is no longer the prize it was.
• BSUoS: fixed £/MWh set ahead of the charging period, with no peak sensitivity.

Stacked, the 20kW example saves around £2,700 a year, of which roughly half is CM. Commodity savings come on top only if the contract is profile-priced or flexible; on a flat fixed price, moving units within the day changes nothing on the energy line.

Comparing fixed non-commodity against pass-through

A fully fixed quote bundles CM, DUoS, TNUoS, BSUoS and levies into the unit rate. The supplier carries forecast and reconciliation risk, and prices a margin for it. A pass-through quote shows CM as a separate line, often reconciled after EMRS completes its May to September true-up.

To compare fairly, ask suppliers:

• which charges are fixed and which float;
• what CM rate in p/kWh is assumed, and on what volume basis;
• whether the CM line applies to all consumption or only to peak-window units.

Then rebuild both quotes as pence per kWh on the client's actual profile. A peaky site on a pass-through contract can pay materially more than the market average. A site that already runs light at teatime is usually better off on pass-through, and should refuse to subsidise someone else's peak.

Watch for suppliers billing CM on total consumption at a flat rate. That is a commercial convenience rather than the settlement mechanism, and it penalises off-peak-weighted sites.

What to do this autumn

Before signing anything for October 2026 onwards, run the four-step HH calculation above for every client with a peaky evening profile and put the resulting p/kWh next to each quote's CM line. Ask suppliers, in writing, for their assumed 2026/27 CM rate and whether reconciliation after EMRS's May to September 2027 true-up can be billed back. Pull the DNO red band times and rates for each MPAN so the load shifting case is site-specific rather than generic. Where a client is weighing battery storage or a process reschedule, model CM and DUoS red together; on the example above, that pairing carried the whole business case.