The UK’s Capacity Market has been suspended until further notice after a shock ruling from the European Court of Justice (ECJ) concluded the mechanism could be in breach of EU State Aid rules. The ECJ issued its judgement in response to a legal challenge brought by clean technology firm Tempus Energy, which argued the mechanism for securing back-up power during the winter months unfairly favoured fossil fuel generators over newer, cleaner technologies.
Business Green 15th Nov 2018 read more »
The UK’s scheme for ensuring power supplies during the winter months has been suspended after a ruling by the European court of justice that it constitutes illegal state aid. Payments to energy firms under the £1bn capacity market scheme will be halted until the government can win permission from the European commission to restart it. Labour said the ruling meant that the government would have to rethink the market. Alan Whitehead, shadow energy minister, said: “This judgment effectively annuls previous state aid permission to provide subsidies for existing fossil fuel power plants. I have long criticised this bizarre arrangement, which simply throws money at old dirty power stations.” Richard Black, director of the ECIU think-tank, said the ruling should be seen as an opportunity for the government to reshape market away from fossil fuels and towards battery storage and cleaner technologies. Clark said the government was already in contact with the European commission and seeking state aid approval, so the capacity market could be reinstated. The business secretary used his speech to celebrate the rise of renewables. “Cheap power is now green power,” he said.
Guardian 15th Nov 2018 read more »
Britain’s scheme for keeping the lights on through the winter has been thrown into chaos after a European court forced it to be suspended, triggering fears over security of supply. The government said that its “capacity market” scheme, which pays power station owners subsidies to guarantee that they are available to generate electricity if needed, had been halted after the ruling. Up to £1 billion in payments for the coming year now cannot be made, denying energy companies a key source of income and casting doubt on whether their plants can still be relied on for back-up supply. The ruling also has raised fears over electricity supplies for future winters, for which billions of pounds in further subsidies have been awarded to existing and proposed plants.
Times 16th Nov 2018 read more »
The UK’s subsidy scheme for back-up electricity generation has been suspended after the European General Court found that the payments system should be subject to a state aid investigation. The surprise judgment imposed a “standstill period” on the UK’s capacity market- which guarantees power companies extra payments for generating electricity when supplies are tight. The court found that the European Commission should not have given the go-ahead to the capacity market when it was introduced in 2014 because it may not have been compatible with EU rules on state supports. The government is now barred from holding auctions scheduled for early next year and from making payments under the mechanism pending an investigation by the European Commission, casting doubt over companies’ plans to invest in increased back-up generation for the grid.
FT 15th Nov 2018 read more »
Telegraph 15th Nov 2018 read more »
Europe’s carbon market faces an uncertain few weeks over whether the UK, one of its biggest participants, will continue in its flagship system to curb pollution on the continent. Because of uncertainty over its exit from the EU, Britain has declined to schedule any of its twice-monthly auctions for new emissions permits beyond December, fearing allowances for 2019 may become invalid. The potential end of UK carbon auctions, more than three months before Britain is officially due to leave the EU, risks stoking fresh volatility in prices across the continent, according to analysts. That is because Britain is one of the biggest net suppliers of the credits that can be bought by participants in the Europe-wide scheme. While the UK could remain in the EU’s ambitious Emissions Trading Scheme (ETS), a hard Brexit that sees the country crash out of the single market would leave any 2019 allowances sold by the UK worthless, creating a potential bureaucratic mess if they continue selling them after December.
FT 16th Nov 2018 read more »
Battery storage developers in the UK are facing uncertainty over their prospective revenue stacks as the Capacity Market was placed in an indefinite “standstill period”. This morning the European Court of Justice (ECJ) ruled that in clearing the UK Capacity Market scheme for state aid, the European Commission had failed to properly investigate the scheme’s inner workings. As a result, the ECJ this morning annulled the Commission’s granting of state aid, forcing the government to essentially suspend the scheme. National Grid, the body responsible for running the scheme’s auctions, has confirmed that the forthcoming T-1 and T-4 auctions have been postponed indefinitely while discussions between the UK government and the European Commission continue.
Solar Power Portal 15th Nov 2018 read more »