On 7 February 2018 the European Commission announced the approval under State aid rules of electricity capacity mechanisms in Belgium, France, Germany, Greece, Italy and Poland, which are aimed to ensure that electricity supply can match demand in the medium to long term. The Commission assessed the six mechanisms to ensure they meet strict criteria under EU rules, in particular the Guidelines on State aid for environmental protection and energy. The Commission also took into account the conclusions of its 2016 sector inquiry into capacity mechanisms. This confirmed that capacity mechanisms must target a genuine security of supply need, must be designed in such a way as to avoid competition distortions and must deliver security of supply at the lowest possible cost for consumers, as well be open to providers in other Member States.
The six approved capacity mechanisms adopt three different structures. In the case of Belgium and Germany, the Commission authorised strategic reserves, whereby certain generation capacities are kept outside the electricity market for operation only in emergencies. As regards Italy and Poland, the Commission authorised market-wide capacity mechanisms, whereby companies are offered payments to generate electricity or reduce their electricity consumption. In the case of France and Greece, the Commission authorised demand response schemes, whereby customers are incentivised to reduce their electricity consumption in hours where electricity is scarce.
In its press release, the Commission highlighted certain characteristics of the measures which are in line with the conclusions of its sector inquiry. For example, each Member State had clearly identified and qualified the security of supply risks, and each had agreed to grant support through regular, competitive auctions or tenders. Further information about each of the mechanisms is available in the Commission’s factsheet.