EURELECTRIC publishes a reference model for European capacity markets

The completion of the Internal Energy Market remains a cornerstone of European energy policy. Yet faced with growing concerns about long-term security of supply, several EU countries are in parallel moving forward with national capacity markets. EURELECTRIC believes that capacity markets must evolve from national to regional solutions, to optimise the use of capacity across regions – and ultimately Europe as a whole. A new EURELECTRIC report, published today, sheds light on how capacity markets can be properly designed to keep the door open to such regional solutions.

Titled “A reference model for European capacity markets”, the report outlines crucial elements of capacity markets and shows how cross-border participation in capacity markets could act as a stepping stone to regional markets. It also discusses which elements of capacity markets should be harmonised to reach a regional solution.

EURELECTRIC Secretary General Hans ten Berge said: “European energy markets today are facing one pressing question: how can we ensure that markets deliver continued security of supply in the future? For EURELECTRIC, capacity markets are clearly one piece of the puzzle. However, capacity markets should strengthen rather than undermine ongoing efforts to complete the Internal Energy Market. We therefore urge policymakers to make sure that capacity markets go beyond national borders. In addition, capacity markets should follow a set of basic design features: they should be market-based, technology-neutral, open to new and existing plants, and open to generation, demand response and storage.”

As the European Commission steps up its efforts to provide guidance on what the future electricity market design in Europe should look like, the present report shows EURELECTRIC’s continued engagement in this important discussion. The report builds on previous work published by EURELECTRIC late last year.

The shape of the evolving market design was also at the heart of today’s EURELECTRIC conference “Capacity Markets – delivering security of supply in the Internal Energy Market”. The workshop looked at current national initiatives on capacity markets with the aim of drawing out lessons for future capacity market implementation in Europe.