S.11. State Aid


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EC opens in-depth investigation into British capacity market mechanism

Thursday, February 21, 2019

The EC is launching an in-depth investigation into the British capacity market pending its appeal against a judgement annulling its approval of the mechanism for lack of sufficient investigation.

In July 2014, the EC approved the UK’s capacity market mechanism. The approval Decision was however quashed by the EU General Court in Case T-793/14 (see news of November 15, 2018: Landmark ruling in favour of DSR provider Tempus Energy confirms generation bias in UK capacity market design). The EC appealed the annulment of its approval before the European Court of Justice in February 2019, which appeal does not however suspend the validity of the annulment judgment. As a consequence, the EC is now opening an in-depth investigation into the UK’s capacity market and its compatibility with EU State aid rules.

Indeed, the General Court, at the time, had not ruled on the compatibility of the capacity market with EU State aid rules, but instead annulled the Decision finding that the EC had not investigated sufficiently certain elements relating to market participants providing demand-side response services (DSR).

Since the EC’s pending appeal does not suspend the effects of the General Court’s judgment, the EC is now initiating a reassessment of the compatibility of the UK’s capacity mechanism with the internal market.

Interested parties will have the opportunity to submit their comments during a consultation as part of the investigation.