Last week, a ruling by the Court of Justice of the European Union annulled State aid approval for the UK Capacity Market.
As a result, payments to energy firms under the scheme are suspended until the government can win permission from the European commission to reinstate future auctions.
Here’s our round up of industry reactions to the surprise ruling:
Lawrence Slade, chief executive of Energy UK:
We are extremely disappointed by today’s General Court judgment as the Capacity Market has proven that it can successfully deliver security of supply at the lowest cost to consumers.
“We are already working closely with BEIS and are fully supportive of their efforts to work with the European Commission to reinstate future auctions and continue the CM scheme. Given the serious financial implications for capacity providers as well as the need for investor certainty and security of supply, this issue needs to be resolved as soon as possible.”
Tim Rotheray, director of The Association for Decentralised Energy:
“Industry raised concerns about the need for a level playing field for DSR [Demand Side Response] when competing for Capacity Market contracts and today’s announcement is therefore not a surprise. It is industry that will suffer the most from today’s ruling, which leaves the market in limbo, without access to revenue streams it had been guaranteed by Government.
“If Government is serious about growing the flexibility market to deliver a decarbonised, cost efficient system, we hope it will work with the European Commission to ensure that the state aid approval process runs smoothly and that any necessary reforms to the Capacity Market are made as soon as possible.”
Richard Black, director of the Energy and Climate Intelligence Unit (ECIU):
BEIS is seeing this as a challenge; but actually, the court has presented it with a massive opportunity to constructively re-think a measure that while keeping the lights on is working against other government aims on cost and decarbonisation.
“Re-shaping the market to incentivise battery storage and genuine demand-shifting rather than dirty diesels will bring in a system that’s cheaper for consumers; prioritising low-carbon capacity would speed the demise of coal and gas, helping ministers cut emissions faster, which they know they have to do in order to meet climate targets.”
Doug Parr, chief scientist, Greenpeace UK:
“The government’s Capacity Market was effectively rigged in favour of old-fashioned dirty generation. Shutting out modern, smart technologies turns out to not only be short-sighted and foolhardy, but potentially illegal. The government should heed the many expert voices explaining that we’re not in the twentieth century any more, and our energy policy needs to reflect that. The smarter technologies that allow easier and faster uptake of clean renewable energy are ready, and urgently needed.”
We will provide updates on this story as it progresses – check back with the Energy Advice Hub for the latest news.