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UK Capacity Market – Operated by CUB

CUB operates its own Capacity Market Units (CMUs) under the UK Government’s Capacity Market scheme.

We contract commercial and industrial electricity users directly into our portfolio and manage qualification, compliance, performance and settlement on their behalf.

CUB operates multi-megawatt Proven DSR capacity and continues to expand contracted volume across future delivery years.

We are an active Capacity Market operator — not a referral consultancy.

 

 

 

 

 

 

 

What is the UK Capacity Market?

The Capacity Market is a government-backed mechanism designed to ensure security of electricity supply during periods of system stress.

Participants commit to either:

  1. Reduce demand (Demand Side Response – DSR), or
  2. Generate/export electricity when instructed by the National Energy System Operator (NESO).

In return, participants receive an annual £/kW payment for availability.

 

 

 

 

 

 

 

 

How CUB Operates in the Market

CUB registers and operates its own DSR CMUs.

Sites are contracted directly into CUB-managed units and aggregated into a controlled portfolio structure.

We manage:

  • Qualification and registration
  • Baseline analysis using historic half-hourly demand data
  • Pre-delivery testing
  • Event instruction and monitoring
  • Settlement and revenue distribution
  • Ongoing compliance with Capacity Market Rules

Our portfolio includes manufacturing, industrial processing, pumping and high-load commercial sites.

 

 

Who Qualifies?

In practical terms, sites typically qualify if they:

  • Use 500,000 kWh+ per annum
  • Have 100–250 kW of reducible load (minimum practical threshold)
  • Are half-hourly metered
  • Can reduce demand during short winter peak stress periods

Industrial sites consuming 1–5 GWh annually often have qualifying capacity.

Each site is assessed individually using historic demand data.

 

 

Does Participation Require Hardware?

In most cases, no.

CUB operates a manual Demand Side Response model.

Participating sites receive instruction when a Capacity Market Notice (CMN) is issued and reduce load operationally.

No battery installation or automated control hardware is required under standard participation structures.

 

 

How Much Can a Site Earn?

Earnings depend on:

  1. Qualified kW

  2. Auction clearing price

  3. Derating factor (DSR typically ~80–85%)

Illustrative examples:

250 kW qualified
£50/kW clearing price
Annual contracted revenue ≈ £12,500

500 kW qualified
£50/kW clearing price
Annual contracted revenue ≈ £25,000

Clearing prices have historically ranged between £40–£75/kW depending on auction year.

Revenue is contracted for the full delivery year.

You can read our Case Studies about working with Middle Level Commissioners & Burgess Group Ltd, enrolling them into the Capacity Market, and generating new revenue.

 

What Happens During a Capacity Market Notice?

A Capacity Market Notice (CMN) is issued by NESO when system margins tighten.

Whilst CMN’s have been issued a System Stress Event has never actually occurred however events would be assumed to take place:

  • During winter weekday evenings
  • For 30 minutes or longer
  • When NESO has exhausted all other options

CUB coordinates portfolio response and monitors performance across contracted sites.

 

 

Compliance, Testing and Risk

Capacity Market participation includes:

  • Pre-delivery testing
  • Performance measurement against scheme baseline methodology
  • Availability obligations
  • Potential non-delivery penalties

CUB manages portfolio performance and monitors site readiness throughout the delivery year.

Participation is structured, controlled and rule-driven — not speculative.

 

 

Is the Capacity Market Right for Every Site?

No.

The scheme is generally not suitable for:

  • Small office loads
  • Sites with no operational flexibility
  • Businesses where short load reductions are not feasible

It is most effective for industrial and process-heavy electricity users with meaningful peak demand.

 

 

Frequently Asked Questions

What is the minimum size for Capacity Market participation?
Typically 100–250 kW of reducible load, though 500,000 kWh+ annual usage is a practical starting point.

Is hardware required?
Not in standard manual DSR models operated by CUB.

How often are stress events called?
Historically limited and concentrated in winter peak periods.

What is a CMU?
A Capacity Market Unit (CMU) is the registered entity that contracts capacity into the scheme.

What is derating?
A percentage applied to qualified capacity reflecting reliability assumptions under Capacity Market Rules.

Are contracts multi-year?
Delivery commitments are typically annual, with participation secured via T-1 or T-4 auction structures.