Capacity markets and the Energy Union: uneasy relationship?

11 June 2015

Capacity markets, which allow power generators to receive compensation for power they will provide in the future, have been said to prioritise fossil fuel generation and not being cost-effective. There are fears that uncoordinated development of capacity markets could create more barriers and undermine objectives of the internal energy market. The European Commission has expressed concerns regarding competition issues, and is examining whether payments to power generators can be deemed as illegal subsidies. Speakers looked into how capacity mechanisms function, assessed the different types of markets, and considered their compatibility with the Energy Union, and single market and climate objectives. There was also discussion on alternative developments and models that would allow for more flexibility and put more emphasis on demand side measures.