Capacity Market investigation

Following a European Court of Justice (ECJ) ruling, Capacity Market payments auctions and payments have been suspended. A further European Commission (EC) investigation is underway.

The Government introduced the Capacity Market to provide an insurance policy against the possibility of future blackouts – for example, during periods of low renewable generation and high demand. This ensures that consumers continue to benefit from reliable electricity supply at an affordable price. The Capacity Market provides payments to encourage investment in new generating capacity or for existing generating capacity to stay open.

What’s changed?
On 15 November 2018, the European Court of Justice (ECJ) ruled that the European Commission (EC) had not carried out a sufficient impact assessment of the Capacity Market when making their decision to grant state aid approval for the scheme. Because of the ruling, the Capacity Market constitutes illegal state aid and its associated auctions and payments have been suspended.

An investigation has now opened
In Feburary 2019, the EC announced that an investigation had opened, in order to decide whether the Capacity Market will be discontinued or re-instated. You can read the press release here.

You can read the ministerial statement here, and the original court ruling here.

You can read our latest regulatory report here