Close Menu
    Latest Category
    • Finance
    • Tech
    • EU Law
    • Energy
    • fx
    • About
    • Contact
    EUbusiness.com | EU news, business and politicsEUbusiness.com | EU news, business and politics
    Login
    • EU News
    • Focus
    • Guides
    • Press
    • Jobs
    • Events
    • Directory
    EUbusiness.com | EU news, business and politicsEUbusiness.com | EU news, business and politics
    Home

    Capacity mechanisms show ‘significant shortcomings’ in efforts to secure energy supplies

    npsBy nps13 April 2016Updated:25 June 2024 No Comments3 Mins Read
    — Filed under: Energy EU News Headline1
    Share
    Facebook Twitter LinkedIn Pinterest Email
    Capacity mechanisms show 'significant shortcomings' in efforts to secure energy supplies

    Electricity pylons

    (BRUSSELS) – Capacity mechanisms have a strong role in increasing security of electricity supply but many EU Member States must be more thorough assessing need and design to ensure they are targeted and cost-effective.

    So says an interim report consolidating the findings and tentative conclusions of the sector inquiry into capacity mechanisms, adopted Wednesday by the European Commission, which now invites Member States, stakeholders in the electricity sector and others to submit comments on its initial findings.

    The report says that unnecessary and badly designed capacity mechanisms can distort competition, hinder electricity flows across borders and lead to consumers overpaying for electricity.

    The Commission now invites Member States, stakeholders in the electricity sector and others to submit comments on its initial findings.

    What are capacity mechanisms?

    An increasing number of Member States are taking action to secure their electricity supplies and prevent potential black-outs by introducing capacity mechanisms.

    Capacity mechanisms are measures taken by Member States to ensure that electricity supply can match demand in the medium and long term.

    Capacity mechanisms are designed to support investment to fill the expected capacity gap and ensure security of supply. Typically, capacity mechanisms offer additional rewards to capacity providers, on top of income obtained by selling electricity on the market, in return for maintaining existing capacity or investing in new capacity needed to guarantee security of electricity supplies.

    Capacity mechanisms have an impact on competition in the internal electricity market. Many of these mechanisms involve State aid, so they are subject to EU State aid rules. The European Commission has launched a sector inquiry, established a Working Group with Member States and started individual assessments of Member States’ capacity mechanisms on the basis of the Guidelines on State aid for environmental protection and energy 2014-2020 (“EEAG”).

    Commissioner Margrethe Vestager, in charge of competition policy, said: “European consumers and companies should not have to face black-outs, and capacity mechanisms can help to reduce this risk. At the same time, consumers should not overpay for electricity and competition should not be undermined. The report published today shows that there is a lot of room for Member States to improve how they assess whether capacity mechanisms are needed, and how they design them. Mechanisms that are open to electricity providers across EU borders are key to building a true Energy Union in Europe.“

    The Commission inquiry on capacity mechanisms shows capacity mechanisms can increase security of electricity supply but also points to a lack of proper and consistent analysis by many Member States of the actual need for capacity mechanisms. It also appears that most capacity mechanisms could be better designed in order to be more market-based and more cost effective. These findings do not prejudge the Commission’s assessment of the compatibility with EU state aid rules of any individual capacity mechanism, which requires a case-by-case analysis.

    Factsheet for further details

    Report and staff working document

     

    Add A Comment

    Leave A Reply Cancel Reply

    You must be logged in to post a comment.

    nps
    • Website

    Related Content

    EU approves EUR 300m for common defence procurement projects

    EU proposes e-declaration for the posting of workers

    EU calls on Apple to end geo-blocking on media services

    EUR/USD touches one year low as Trump takes control of Congress – Euro currency news daily

    EU artificial intelligence factories set for 2025

    Council agrees reform of EU VAT rules for the digital age

    LATEST EU NEWS

    EU approves EUR 300m for common defence procurement projects

    14 November 2024

    EU proposes e-declaration for the posting of workers

    14 November 2024

    EU calls on Apple to end geo-blocking on media services

    14 November 2024

    EUR/USD touches one year low as Trump takes control of Congress – Euro currency news daily

    14 November 2024

    EU artificial intelligence factories set for 2025

    13 November 2024
    BRIEFING

    Agenda

    This week, COP29 begins in Azerbaijan; finance ministers discuss the EU's annual budget for 2025; and MEPs hold a plenary session on EU-US relations, EU summits, deforestation and COP 29...

    EUbusiness Week

    This week competitiveness and environment ministers will hold informal meetings…

    Eurozone Economic Calendar

    Key economic calendar events for the week 11 to 16 November 2024

    The Week's Top Stories

    This week competitiveness and environment ministers will hold informal meetings…

    Advertisement

    Subscribe to EUbusiness Week

    Get the latest EU news

    Latest Posts

    EU approves EUR 300m for common defence procurement projects

    14 November 2024

    EU proposes e-declaration for the posting of workers

    14 November 2024

    EU calls on Apple to end geo-blocking on media services

    14 November 2024

    EUR/USD touches one year low as Trump takes control of Congress – Euro currency news daily

    14 November 2024

    CONTACT INFO

    • EUbusiness Ltd 117 High Street, Chesham Buckinghamshire, HP5 1DE United Kingdom
    • +44(0)20 8058 8232
    • service@eubusiness.com

    INFORMATION

    • About Us
    • Advertising
    • Contact Info

    Services

    • Privacy Policy
    • Tems
    • EU News

    SOCIAL MEDIA

    Facebook
    eubusiness.com © EUbusiness Ltd 2025
    Design and developed by : Dotsquares

    Type above and press Enter to search. Press Esc to cancel.

    Sign In or Register

    Welcome Back!

    Login below or Register Now.

    Lost password?

    Register Now!

    Already registered? Login.

    A password will be e-mailed to you.

    We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.Ok