Capacity mechanisms have been controversial in theory as well as practice. Lessons from experience with different capacity mechanisms led to the development of the reliability options. This mechanism promises two advantages over other types of capacity mechanisms. Firstly, it ensures the availability of capacity contracted via the capacity mechanism during scarcity. Secondly, the reliability option mechanism limits any energy market distortion due to its implementation and provides the consumer a hedge from high prices. We assess the ability of reliability options in delivering the two promises by analysing the reliability option designs in Italy and Ireland. We find that they deliver on the first promise but only partly on the second.
The last five years have witnessed fundamental transformations which have created a new context that requires recalibrating EU transport policy and regulation: new mobility patterns after COVID; geostrategic shocks in [...]
Following the EMD reform of 2024, the Commission is tasked to publish a report on the ‘possibilities of streamlining and simplifying the process of applying for a capacity mechanism’ by [...]
Capacity mechanisms are gaining momentum in Europe, and the latest EU electricity market reform further reinforces their role. The negative externalities exerted by these national mechanisms in interconnected zones might, [...]
The European Commission has confirmed plans to enshrine a 90% greenhouse gas (GHG) reduction target by 2040 into law, in line with the European Climate Law’s goal of achieving climate [...]
With 2023 being the hottest year documented and global emissions remaining at record-high levels, we are reminded about the importance of translating climate commitments into effective policies – across both [...]
This report summarises the insights collected during the workshop on “The role of carbon markets in reaching carbon neutrality”, which took place in June 2024. This workshop was part of [...]
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