Cashflow calculation

Cashflows (£/MW) inform build decisions each year from 2029.

Calculated cash flows are used to inform new-build, retrofit, and retirement decisions of gas plants and batteries.

Cashflows = Wholesale Revenues + Balancing Mechanism Revenues + Ancillary Service Revenues + Capacity Market Revenues - Fixed OpEx - Variable OpEx

Battery revenues are estimated using the daily power price spread

Wholesale, Balancing Mechanism, and Ancillary Service revenues are estimated using a linear regression model that correlates daily power price spreads with BESS revenues.

The impact of more batteries in the system suppressing price spreads is accounted for by derating these revenues, using a fit of how as fleet capacity grows, revenue potential falls.

Gas plant revenues are estimated using wholesale power prices and outage rates

• Wholesale Revenues = (Power Price Generation (1 - Enforced Outage Rate)) / Generation Capacity

Here, Enforced Outage Rate reflects the reduction in revenues from outages and scales with the number of cold, warm, and hot starts for the technology. The Enforced Outage Rate resets based on the maintenance schedule shown here.

• Balancing Mechanism Revenues are taken as a multiple of wholesale revenues
• Ancillary Service Revenues are set to £2.50/MW for CCGTs and £15/MW for OCGTs and Recips. This is based on analysis by CRA.

Capacity market revenues are considered

• Capacity Market Revenues are calculated as Capacity Market Derating Factor x Generation Capacity
• Fixed OpEx is calculated by multiplying the maintenance schedule by a base fixed OpEx, as described here.
• Variable OpEx is set as the short-run marginal cost of the technology.