Suspension of the Capacity Market
The capacity market payments have recently been suspended. After the General Court of the Court of Justice of the European Union found in favour of Tempus Energy, against the European Commission, annulling the Commission’s State aid approval for the UK Capacity Market.
Meaning a main service used to help deal with stresses on the network, power shortages and surges has effectively been stopped. This of course adds uncertainty to the power grid's reliability.
The capacity market is a mechanism which is designed to help the power grid deal with times of stress on the network or surges. Being able to provide extra needed generation quicker than major power stations as well as offering load-management capacity, makes it a very valuable electricity balancing service. The capacity market helps to secure the supply of electricity in times of stress on the network, or demand surges.
Simply put, the UK will have less flexible power available, when in winter, we could really do with more of it.
Interestingly, the ruling had nothing to do with the capacity market mechanism, but rather how it was approved back in 2014. In fact, nothing about how the design of the market has been challenged. Plus the government still sees it as the most effective and most efficient means of securing the UK's energy supply. Therefore they are trying to reinstate this scheme as soon as possible. However, how long will this take? No-one knows.
The ruling not only stops the government from holding any further capacity auctions, it also restricts them from making any payments under existing agreements, until it is re-approved.
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To read more about the suspension go to these articles;