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Capacity Market Charge
Key takeaways
The Capacity Market is designed to make sure there is enough reliable capacity available to meet demand.
The cost is recovered through electricity suppliers and passed through to customers in electricity pricing.
For many businesses it is not something you can “remove”, but peak-demand behaviour can affect exposure on some contract structures.
What is the Capacity Market?
The Capacity Market is a UK mechanism intended to help ensure there is enough reliable electricity capacity available, especially during periods of high demand.
EMR Settlement describes the Capacity Market as providing payments that encourage investment in new capacity and support existing capacity staying available.
Capacity agreements run in delivery years (typically 1 October to 30 September), and providers have obligations tied to system stress events.
What is the Capacity Market charge on a bill?
The “Capacity Market charge” is the part customers ultimately fund, via suppliers, to pay for those capacity agreements.
How it appears depends on contract type:
All-inclusive
- It may be baked into your unit rate
Pass-through
- It may appear as its own line item, sometimes described as a “CM charge” or “Capacity Market supplier charge”
Why it matters to businesses
It matters because it is one of the larger electricity policy costs in the mix, and it can change over time.
If you are on a pass-through style contract, you can see it fluctuate and it can make budgeting harder.
Can you reduce it?
Most businesses cannot “opt out” of the scheme, but there are a few practical levers depending on your setup:
- Know your contract type (all-inclusive vs pass-through)
- Understand how your supplier allocates it (some structures link more closely to peak demand periods)
- If you have the capability, consider load shifting / demand flexibility, especially if you already monitor half-hourly usage
If you do not have the appetite to manage it, all-inclusive pricing may be simpler.
