EURELECTRIC welcomes state aid inquiry into capacity mechanisms and reiterates calls for stronger Commission leadership on market integration

Press Release

EURELECTRIC welcomes the European Commission inquiry, launched on April 29, into capacity mechanisms implemented, or under implementation within Member States to safeguard security of electricity supplies. EURELECTRIC Secretary General Hans ten Berge seized the opportunity to call for a harmonised approach to capacity mechanisms across Europe and stronger Commission leadership in the implementation of an efficient, integrated European energy market.Qualifying his remarks, he stated: “The completion of the Internal Energy Market must remain the cornerstone of European energy policy. In this regard, EURELECTRIC is eager to work together with the Commission on the inquiry and on all other market design developments in Europe. We are committed to facilitating a quick outcome of the inquiry and are confident it will result in best practices that will lead to the development of a clear, efficient and sustainable capacity market reference model for Europe.”

EURELECTRIC believes that capacity markets must evolve from national to regional solutions, to optimise the use of capacity across regions – and ultimately across Europe as a whole. Guiding principles for the implementation of capacity markets are outlined in a EURELECTRIC publication, issued in March: “A reference model for European capacity markets”. The report recommends a set of fundamental criteria on which any capacity market should be based and lists the following design features as key:

  • Market-based – Capacity should always be valued in a competitive market. Capacity prices should be allowed to move freely without distortive price regulation;
  • Technology-neutral – All technologies that provide firm capacity should be able to participate in the market without discrimination;
  • Open to new and existing plants – Market access should be based on a level playing field between both new and existing firm capacity providers;
  • Regional – The capacity market design should take regional interdependencies into consideration and allow the selection of the cheapest set of capacity on a regional basis, taking into account interconnection constraints;

Open to generation, demand response and storage – All forms of capacity throughout the value chain should be able to participate in the market.

Press release available here.