Capacity Market Rules: change proposals 2026

What this is about

Ofgem's annual Capacity Market rules consultation covers 13 change proposals (CP382–CP398) for the 2014 CM Rules. The Capacity Market Advisory Group (CMAG) has discussed each proposal, and Ofgem sets out a minded-to position on every one.

The proposals are operational rather than structural. They adjust definitions, calculation inputs, metering processes, reporting requirements, and prequalification rules. None redesigns the CM mechanism itself. But operational rules determine compliance costs, and compliance costs determine which assets find it commercially viable to participate. The cumulative effect of 13 incremental changes matters more than any single one.

The most commercially significant proposal is CP385, which updates the inputs used to calculate load-following capacity obligations. This directly affects how flexible assets — storage, DSR, gas peakers — are valued and what they must deliver. CP392 on asset metering and delivery assurance also has teeth: it changes how capacity providers prove they can deliver, which is the core contract the CM exists to enforce. CP394 on conditional prequalification for assets with pending connection dates matters for the pipeline of new capacity entering the mechanism.

The proposals

#### CP382 — Independent Technical Expert definition and report templates

Updates the definition of who qualifies as an Independent Technical Expert (ITE) and standardises the report templates they use. ITEs assess whether CM units can deliver their contracted capacity. Standardisation reduces ambiguity for capacity providers commissioning assessments and for the Delivery Body (NESO) reviewing them. Low commercial impact but reduces a friction point in the prequalification process.

#### CP384 — Termination reasons under Rule 6.10.1(g) and (ga)

Clarifies the grounds on which a CM agreement can be terminated. Termination provisions are the sharpest edge in the CM framework — they determine when a capacity provider loses its agreement and the associated revenue stream. Any change to termination language matters to project finance, because lenders price termination risk into their models. The detail of what Ofgem proposes here — whether it narrows or widens the grounds — will determine whether this tightens or loosens the regime.

#### CP385 — Load-following capacity obligation calculation inputs

This is the headline proposal. The load-following obligation determines how much capacity a CM unit must deliver in any given settlement period, adjusted for system conditions. Updating the calculation inputs changes the obligation profile, which changes the commercial risk for flexible assets. If the new inputs increase the obligation during peak periods, storage and DSR providers face higher delivery risk. If they smooth the obligation, flexible assets become more attractive relative to baseload. The economic effect depends entirely on which inputs change and in which direction.

#### CP386 — Alignment of metering test processes, DSR delivery periods, and terminology

Harmonises testing procedures across different CM unit types. DSR providers have long complained that metering test requirements are inconsistent with how their assets actually operate. Alignment should reduce the compliance cost of demonstrating DSR delivery, which matters because DSR participation in the CM has been persistently below what the mechanism's designers intended.

#### CP387 — Metering assessment deadlines

Adjusts the timeline for metering assessments. Tight deadlines create compliance risk; loose deadlines delay assurance that units can deliver. The balance affects both capacity providers (who need time to arrange tests) and the system (which needs confidence that contracted capacity is real).

#### CP389 — Connection capacity review

Introduces or modifies a process for reviewing the connection capacity of CM units. Connection capacity determines how much a unit can physically deliver to the grid, which caps its CM obligation. With 700+ GW in the connection queue and connection offers being revised, this proposal addresses what happens when a CM unit's connection capacity changes after it has secured an agreement. The answer determines whether the capacity provider bears the risk of connection delays or whether the mechanism absorbs it.

#### CP390 — Simplifying reporting and monitoring provisions

Reduces the reporting burden on capacity providers. Reporting requirements have accumulated over successive rule changes and some are now redundant or duplicative. Simplification lowers compliance costs, which disproportionately benefits smaller participants who cannot spread fixed regulatory costs across a large portfolio. This is a rare proposal that works in the right direction — reducing the compliance cost that acts as a barrier to entry.

#### CP392 — Asset metering and delivery assurance

Changes how capacity providers meter their output and how the system assures delivery. This is operationally significant because the CM's credibility depends on contracted capacity actually being available when called. If metering rules are too lax, the mechanism pays for capacity that does not exist. If too strict, viable assets are excluded by compliance costs. CP392 reportedly enables providers to use asset-level metering, which could improve accuracy but adds complexity.

#### CP393 — Full review of Exhibits

The Exhibits to the CM Rules contain the detailed forms, templates, and schedules that capacity providers must complete. A full review suggests accumulated inconsistencies and outdated references. Administrative, but the Exhibits are what participants actually interact with day-to-day.

#### CP394 — Conditional prequalification for assets with pending connection dates

Allows assets that have applied for a new or modified connection date to prequalify conditionally for the CM. This directly addresses the interaction between the connection queue crisis and the capacity mechanism. An asset that cannot get a firm connection date by the prequalification deadline is currently excluded from the CM, even if it will be connected before the delivery year. CP394 creates a pathway for these assets, which increases the pool of capacity competing in auctions. More competition should lower clearing prices, which benefits consumers. The risk is that conditionally prequalified assets fail to connect, leaving a capacity gap.

#### CP396 — Total Project Spend review

Reviews the rules on Total Project Spend (TPS), which caps the capital expenditure a new-build CM unit can claim. TPS thresholds determine which projects qualify for longer CM agreements (up to 15 years for new build). Changes to TPS rules affect the economics of new-build generation entering the CM and therefore the mechanism's ability to incentivise new capacity rather than just retaining existing plant. Ofgem notes these go beyond DESNZ's 'housekeeping' changes, suggesting substantive adjustments to the thresholds or methodology.

#### CP397 — Temporary FCM grace period

Introduces a temporary grace period for the Final CM Metering (FCM) process. Grace periods give capacity providers additional time to resolve metering issues before facing penalties. Temporary suggests Ofgem views this as transitional — addressing a known problem while a permanent solution is developed. The question is whether "temporary" acquires permanence, as regulatory grace periods often do.

#### CP398 — Enabling capacity providers to use their own Meter Operator Agent

Currently, metering arrangements are constrained by rules on which meter operators can be used. CP398 would let capacity providers appoint their own Meter Operator Agent, giving them more control over the metering process and potentially reducing costs. This removes an unnecessary restriction, provided the metering data remains accurate and auditable. The beneficiaries are capacity providers who currently pay above-market rates for constrained metering services.

How to respond

Deadline: 24 May 2026

Method: Email responses to [EMR_CMRules@ofgem.gov.uk](mailto:EMR_CMRules@ofgem.gov.uk)

Consultation document: Available on the Ofgem website as a PDF (1.86MB). Each proposal section ends with specific questions for stakeholders. Respondents can address individual proposals rather than the full set.

Who should respond: CM participants, prospective participants, aggregators, meter operators, DSR providers, generators, storage operators, and anyone with a commercial interest in how the CM operates. The proposals on metering (CP386, CP387, CP392, CP397, CP398) are particularly relevant to flexibility providers and independent generators. CP394 matters to anyone with a project in the connection queue. CP396 matters to anyone planning new-build generation.