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Energy | Working Paper
Electricity Generation Capacity Tenders in the Security of Supply Interest: It’s All Wrong, but It’s All Right
20 March 2007
This article discusses the relationship between Member State obligations to facilitate a stable internal electricity market investment climate on the one hand and rights to intervene in investment decisions by launching a tender procedure on the other hand. The author argues that, although responsibility for investments in new electricity generation capacity is at the outset left to market participants based on electricity market price signals, public intervention mechanisms still have a part to play in promoting desired investments. Member State obligations to facilitate a stable investment climate are not necessarily sufficient to ensure security of supply. Given the complexity of the market evaluations to be made and the fundamental interests involved in securing Member States electricity supplies, it is argued that Community institutions should practice some degree of self-restraint in their review of whether a tendering procedure is necessary in the security of supply interest. Furthermore, it is submitted that Member State rights to rely on demand-side tenders and tenders in the environmental interest may contribute to realize the overall EU energy policy priorities of environmental protection and security of supply.
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