Capacity Mechanisms in the EU Energy Market: The Launch of the Second Edition Book

This FSR Insights event will host the editors of the forthcoming second edition of the “Capacity Mechanisms in the EU Energy Markets” book to discuss how and why the book is intended to serve as a point of reference for regulators and policy-makers on how to design optimal capacity mechanisms in Europe.

Since the first edition of the edited book “Capacity Mechanisms in the EU Energy Markets” (Oxford University Press, 2015), these mechanisms have become a fact of life in member states’ energy markets and one of the hottest topics in the broader European regulatory debate. Concerned about the security of electricity supply, national governments are implementing subsidy schemes to encourage investment in conventional power generation capacity alongside already heavily subsidized renewable energy sources.

With the increasingly connected European electricity markets, the introduction of a capacity mechanism in one country not only tends to distort its national market but also may have unforeseeable consequences for neighbouring electricity markets. As these mechanisms are adopted by member states with limited supra-national coordination, as well as consideration for the cross-border impact, they tend to cause severe market distortions and put the future of the European internal electricity market at risk.

The “Capacity Mechanisms in the EU Energy Markets” book will take stock of the experience so far about how capacity mechanisms work and what consequences they have for the European internal electricity market. In particular, it will:

1. provide a cross-disciplinary view on capacity mechanisms, combining legal, economic and policy perspectives;
2. include a detailed overview of national capacity mechanisms and their implications for the EU internal market;
3. take a European approach, recognizing the need to understand the nature of market failures which are likely to occur in the European electricity markets;
4. offers an outsider’s view on the current developments in Europe, including contributions of recognized extra-EU energy experts.

Before the event, watch the video pills

Host and moderator

Lucila de Almeida | Florence School of Regulation (FSR) and NOVA School of Law

Speakers and book editors

Leigh Hancher | FSR and Tilburg University

Adrien de Hauteclocque | FSR and Court of Justice of European Union

Kaisa Huhta | University of Eastern Finland and Centre for Climate Change, Energy and Environmental Law

Małgorzata Sadowska | ACER (TBC)

Discussants

Paolo Mastropietro | Comillas Pontifical University

Charles Verhaeghe | Compass Lexecon

Related material

Podcast on “The European Commission’s state aid decision on the Belgian capacity mechanism” by Kaisa Huhta and Leigh Hancher.