Workshop: A critical appraisal of EU State Aid decisions on Capacity Mechanisms

Workshop: Is State Aid working in support of the decarbonisation of Europe? A critical appraisal of EU State Aid decisions on Capacity Mechanisms

When: Tuesday, 7 May, 14:00-17:30, Rue de Science 23, 5th Floor, Sun Room, Brussels

Overview

The clean energy transition progressively modifies the resource mix of the power system: CO₂ emitting power plants are step-by-step replaced by non-emitting renewable power capacity and baseload generators generators are replaced by a qualitatively different, more flexible mix of resources on the supply and the demand side of the market. As one consequence, safeguarding power system adequacy becomes a more dynamic challenge.

In this transitional situation, politicians and regulators frequently question the effectiveness of the energy-only-market to provide sufficient investment signals to maintain a desirable level of security of supply. They react by putting in place so-called “Capacity Mechanisms”.

Capacity Mechanisms come in different designs. Fundamentally, they all share the feature that providers of capacity receive remuneration for making electricity available in case of need in addition to market revenues from selling electricity. Capacity Mechanisms will normally qualify as State Aid measures and thus need formal approval by the European Commission.

Whether and how EU State Aid decisions on Capacity Mechanisms contribute to or complicate EU decarbonisation are questions that receive increasing attention. The workshop “State Aid working in support of the decarbonisation of Europe? A critical appraisal of EU State Aid decisions on Capacity Mechanisms” seek to help structure this debate.

Based on an analysis by Agora Energiewende and ClientEarth of five important Eu State Aid decisions on capacity mechanisms (Great Britain, Italy, Germany, Poland and France), participants will engage in an interactive dialogue on the designs that enable, or create barriers to entry to various capacity providers, the length of contracts, support to fossil fuel generation and what could be improved, particularly in view of the recast Regulation on the internal electricity market and the upcoming revision of the EU’s Environmental Protection and Energy State Aid Guidelines.

Programme

About the project

The project Making State aid work for the decarbonisation of Europe is part of the European Climate Initiative (EUKI) of the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU).