State aid approval for the UK Capacity market has been annulled following a court ruling this afternoon, resulting in a ‘standstill period’.
The General Court of the Court of Justice of the European Union has ruled against the European Commission, in favour of Tempus Energy’s claims in regards to the Capacity Market’s bias towards Demand Side Response.
As a result, state aid approval has been annulled and the UK will be prevented from holding capacity auctions. This means generators will not receive payment for the capacity they provide during the imposed standstill period.
The Department for Business, Energy and Industrial Strategy (BEIS) claim that they are working closely with the European Commission to help with the investigation so that state aid approval is reinstated. With the co-operation of the National Grid, BEIS will be contacting all affected parties.
BEIS also state that supply security this winter will not be impacted and that the UK remains committed ‘to delivering secure electricity supplies at least cost’ and are of the belief ‘that Capacity Market auctions are the most appropriate way to do this.’
The T-4 and T-1 Auctions for Delivery Years 2022/23 and 2019/20, respectively will be postponed indefinitely, in accordance with Regulation 26(3) (a) of the Electricity Capacity Regulations 2014.
However, the government are seeking separate state aid approval to conduct a replacement T-1 auction, while the postponed T-4 is expected to be held as a T-3 Auction in next year’s auction round.
Activities which do not require state aid approval will continue, including the completion of the Prequalification process for 2019.
If you would like to learn more about how this could impact your business then feel free to get in touch with Apollo Energy by calling us on 01257 239500 or filling out the contact form here.