Government must have a ‘Plan B’ in case the Capacity Market does not pass renewed State Aid scrutiny by the European Commission, said Rachel Reeves MP, Chair of the Business, Energy and Industrial Strategy Committee.
Reeves was commenting on a response from BEIS to the Select Commitee’s questions on the CM. She said: “The government has provided some welcome clarity on their next steps in response to the European Court of Justice ruling on the Capacity Market. However, the government’s approach rests on European Commission re-approval, doing little to suggest there is any preparation work on a back-up plan in the event of a negative Commission decision. The government needs a ‘plan B’, so that businesses and investors can ensure the UK’s electricity system is prepared for next winter, whatever the Commission’s ruling.”
In its response, minister Claire Perry MP reiterated claims that the European Court” did not rule that aspects of the scheme design were incompatible with State aid rules or question the necessity of having a Capacity Market”, saying the judgement related to ‘process’. Tempus Energy chief executive Sara Bell argues that interpretation is wrong (see link below).
Perry said in the event of a positive decision on State Aid, “past aid granted under the scheme (agreements and payments) can be honoured, including those for the current 2018/19 period.” And she said CM agreement-holders would receive deferred payments if they have “continued to meet their obligations during the standstill period”.
Two options are in discussion that would allow CM payments to be collected from suppliers and held pending an EC decision on State Aid.
Read the BEIS response in full
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- Sara Bell: Capacity Market failings are substantive
- Capacity Market: two options to resume payments in Q1, BEIS seeks views by 10 January
- What has the Capacity Market ever done for us?
- Tempus Energy chief: Capacity Market auctions will have to be re-run
- Ofgem confirms Capacity Market role for co-located storage – including mobile options
- BEIS confirms T-1 auction in summer 2019 but questions remain over payments
- Drax and Iberdrola, mid acquisition, agree to share £36M Capacity Market payment risk
- Capacity Market ruling: the industry responds