UK Capacity Market suspended following landmark ECJ ruling

By Liam Stoker
LinkedIn
Twitter
Reddit
Facebook
Email

The UK's Capacity Market has been initially suspended after the European Court of Justice annulled the European Commission’s decision not to object to the scheme.

However, the Department for Business, Energy and Industrial Strategy has said it intends to work closely with the European Commission to reinstate the scheme as soon as possible.

This article requires Premium SubscriptionBasic (FREE) Subscription

Enjoy 12 months of exclusive analysis

  • Regular insight and analysis of the industry’s biggest developments
  • In-depth interviews with the industry’s leading figures
  • Annual digital subscription to the PV Tech Power journal
  • Discounts on Solar Media’s portfolio of events, in-person and virtual

Or continue reading this article for free

The ruling essentially prevents the government from holding future auctions and making payments under existing agreements.

Clean energy technology provider Tempus Energy challenged the decision to grant the UK’s Capacity Market with state aid approval, claiming that its very design unfairly discriminated against clean energy projects, paving the way for the market to be “dominated” by coal, gas and diesel generators.

Tempus claimed that the scheme privileges generation technologies over demand-side response in a “discriminatory and disproportionate manner”, adding that the European Commission could not have concluded that there were no doubts surrounding the scheme on the basis of a preliminary examination.

And today the General Court of the European Union ruled in Tempus’ favour, annulling the European Commission’s decision not to raise objections to the scheme.

The ruling said that the EC should have had doubts over certain aspects of the scheme and initiated a formal investigation to properly assess its compatibility with state aid rules.

The UK now has two months to appeal the ruling before the Court of Justice.

In a statement issued this morning, Tempus Energy chief Sara Bell said that the ruling meant that a “customer revolution is on the cards”.

“This ruling opens the door for cheaper energy – greater use of demand-side innovation would change the way we use electricity in practice, and place customers at the heart of the energy system for the first time.

“This ruling should ultimately force the UK government to design an energy system that reduces bills by incentivising and empowering customers to use electricity in the most cost-effective way – while maximising the use of climate-friendly renewables,” she said.

A BEIS spokesperson said: “We are disappointed with this judgement, but it poses no issues for our security of supply. As a responsible government, we have prepared for all outcomes, and we will be working closely with the Commission so that the Capacity Market can be reinstated as soon as possible.”

More to follow

Read Next

June 30, 2025
Globeleq and African Rainbow Energy have reached commercial close on the 612MWh Red Sands BESS in South Africa.
June 19, 2025
IPP R.Power Renewables will launch construction on large-scale BESS projects in Romania and Poland in the second half of this year, while Electrica is procuring EPC works for its own BESS project.
June 19, 2025
The electricity regulator for Rajasthan, India, has approved the lowest tariff rate for a battery storage tender in the country so far.
June 18, 2025
South Australia is preparing to launch a new LDES tender seeking projects with a minimum of 30MW and at least 8 hours in duration.
June 11, 2025
The New South Wales government has stacked the incentives available for a solar and home battery energy storage system (BESS) should it connect to a virtual power plant (VPP).

Most Popular

Email Newsletter