Comment on ECJ capacity market ruling
Commenting on a ruling by the European Court of Justice that the UK capacity market is incompatible with EU rules on state aid, Richard Black, director of the Energy and Climate Intelligence Unit (ECIU) said:
“The court’s decision makes no difference to power supplies this winter, but opens a number of interesting questions for the next few.
“The Government says it’s expecting to get the Capacity Market re-approved – but how long will this take, how deeply will the European Commission probe this time, and what changes will it require to the market’s design, if indeed it approves it at all?
“BEIS is seeing this as a challenge; but actually, the court has presented it with a massive opportunity to constructively re-think a measure that while keeping the lights on is working against other government aims on cost and decarbonisation.
“Re-shaping the market to incentivise battery storage and genuine demand-shifting rather than dirty diesels will bring in a system that’s cheaper for consumers; prioritising low-carbon capacity would speed the demise of coal and gas, helping ministers cut emissions faster, which they know they have to do in order to meet climate targets."
The ECJ challenge was brought by DSR provider Tempus energy, who claimed that the ruling 'opens the door for cheaper energy'. In response to the ruling, the UK National Grid issued guidance to all capacity agreement holders and capacity market applicants.