The European Commission announced the launch on Thursday of an in-depth probe into a UK energy scheme that ensures the country has enough power to keep the lights on in winter. The capacity market scheme, which pays electricity generators to be on standby in case National Grid needs additional power in periods of high demand, has been suspended since last November. At that time the European general court made an unexpected decision to annul a finding by the European Commission in 2014 that the scheme was compatible with EU state aid rules. The scheme’s suspension has meant the UK government is unable to make £1bn of payments to companies that have capacity market contracts for this winter, although ministers hope to honour the deals if state aid clearance is once again secured. The halt to payments caused energy company SSE to warn on profits this month, saying it was unlikely to receive £60m owed under the scheme before the end of its financial year in March. The capacity market scheme was set up in 2014 to ensure sufficient back-up power was available when demand was at its highest and if weather conditions meant renewable energy technologies such as wind or solar were not generating electricity. The European general court’s ruling in November came after Tempus Energy, a clean-energy technology company, launched a legal challenge to Brussels’ 2014 finding that the scheme was compatible with EU state aid rules.
FT 21st Feb 2019 read more »