“many Member States currently have inadequate security of electricity supply frameworks in place and they use outdated and inconsistent approaches to assessing security of electricity supply. […] Capacity mechanisms should only be developed to address security of supply if a regional system adequacy assessment points to such a need, taking into account the potential for energy efficiency and demand-side response”.
However, many Member States have already introduced or are introducing capacity remuneration mechanisms (CRMs typically in an uncoordinated way, to address generation capacity adequacy concerns, as noted by the Commission in 2013:
”concerns about the adequacy of generation capacity have led some Member States to consider new public intervention, such as support schemes for investments in new electricity generation capacity or for remunerating existing plants to remain operational”.
In this context the Commission considered that: “those measures should not result in inefficient plants being artificially kept in operation through public support, or in unnecessary new generation capacity being built” and, in the context of the increasingly integrated EU energy markets, that:
“where markets are linked, public intervention affects prices not only nationally but also in neighbouring markets. The resulting distortions of the internal electricity market can be both short-term (affecting system stability, spot market prices and electricity production), and long-term (crowding out investments in new capacity or diverting them to sub-optimal projects)”.
To reduce the potential of any adverse effects on the internal electricity market, in 2014 the Commission, in its Guidelines on State aid for environmental protection and energy 2014-2020,while recognising that:
“measures for generation adequacy can be designed in a variety of ways, in the form of investment and operating aid (in principle only rewarding the commitment to be available to deliver electricity), and can pursue different objectives”
provided a set of criteria which Member States should follow in deciding on CRMs and for their design:
In this latter respect, the Commission also noted that
“aid for generation adequacy may contradict the objective of phasing out environmentally harmful subsidies including for fossil fuels. Member States should therefore primarily consider alternative ways of achieving generation adequacy which do not have a negative impact on the objective of phasing out environmentally or economically harmful subsidies, such as facilitating demand side management and increasing interconnection capacity”.
Finally, in its Energy Union Strategy, the Commission indicated that it intends to
“propose a new European electricity market design in 2015”.
While this new design is expected to confirm most elements on the Electricity Target Model which is being implemented through the Network Codes and their voluntary early implementation (e.g. the significant progress achieved already in day-ahead market coupling), it will likely contain a blueprint for CRMs. Ahead of such proposal from the Commission, this Workshop aims at:
Accordingly, the Workshop will be structured in two sessions.
An updated version of the programme can be downloaded below.This workshop is exclusive for representatives from National Regulatory Authorities and donors of the Florence School of Regulation. Special registration requests must be submitted to the FSR Training and Events Coordinator, Hugo Gil, by e-mail or phone (+39 055 468 5875).
Session “Alignment: possible reforms for carbon market integration” (Topic 5) The third meeting of the Carbon Market Policy Dialogue (CMPD)…
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