The UK Capacity Market is back
The European Commission (EC) has approved the return of the UK Capacity Market. The mechanism was suspended last year following ruling from the European Court of Justice around compatibility with EU State aid rules.
Since then the EC have conducted a formal investigation to reassess its compliance with the rules, analysing feedback from a range of stakeholders within the energy industry. In their announcement today the EC said, “the Commission did not find any evidence that the scheme would put demand response operators or any other capacity providers at a disadvantage with respect to their participation of the scheme.”
What does this mean moving forward?
As the approval was made without any changes, the Capacity Market will continue where it left off, with previous auction results and payments still binding and due to recommence shortly. The energy companies who were affected by the suspension are due to receive a total of £930 million for last winter.
The UK government said that they are “committed to implementing certain improvements to the scheme for the future” which may mean new rules for types of capacity as well as guidelines for minimum capacity entry.