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

Premium
April 30, 2025
Leading BESS owner-operators in the UK have signalled their opposition to the government’s cap and floor support scheme for long-duration energy storage (LDES) in an open letter. We spoke to one its signatories James Basden, founder of Zenobē, about why.
April 30, 2025
A total of 26 battery energy storage projects in Japan have been selected for contracts through the Long-Term Decarbonisation Power Source Auction (LTDA) for 2024.
Premium
April 24, 2025
The grid-scale energy storage market in Italy holds much promise with very ambitious deployment targets for 2030, but it may be difficult for the industry to deliver on those targets.
April 22, 2025
Brian Cashion at Firetrace International on community engagement and local support, essential to battery storage deployment.
April 17, 2025
US non-lithium battery technology companies Eos Energy Enterprises and Unigrid have announced partnerships to deploy their tech abroad, striking deals in the UK and India respectively.

Most Popular

Email Newsletter