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The European Commission has announced a fresh probe into the UK’s Capacity Market scheme following a European judicial ruling revoking its EU approval and leading to its suspension by the UK Government in November.
The UK’s Capacity Market mechanism was introduced to ensure security of supply through paying capacity providers to stay on standby to deliver back-up energy at times of peak demand.
The court ruling was the result of a legal challenge by tech firm Tempus Energy claiming the Capacity Market discriminated in favour of large generators and against Demand Side Response technologies. The Court concluded the European Commission did not complete sufficient research and examination of the impact of the Capacity Market on the operation of the internal energy market.
The Commission will now scriutinise the scheme giving all intersted parties the opportunity to submit their comments. It has not stated how long the probe will last. However Drax CEO, Will Gardiner, expects the issue to be resolved in 2019 and believes it will be re-established on the same or similar terms.
Greg Clark, Secretary of State for Business, Energy and Industrial Strategy, commented: ”the investigation is an important first step in seeing State Aid approval reinstated as soon as possible”.
The industry has also welcomed the investigation. Laurence Slade, Chief Executive of trade body Energy UK, stated “it is vital for capacity providers, suppliers, security of supply and indeed the whole market that the European Commission resolves the situation as soon as possible with some £1 billion of payments for exisitng plants and new developments being halted”.
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