Sian Crampsie

The European Commission has given its approval for the setting up of capacity mechanisms in six EU nations.

The Commission says that it found that the proposed mechanisms in Belgium, France, Germany, Greece, Italy and Poland would contribute to security of supply and would not contravene state aid rules.

Commissioner Margrethe Vestager, in charge of competition policy, said: “Capacity mechanisms can help to safeguard security of electricity supply, but they must be designed so as to avoid distortions of competition in energy markets.

“I am glad that our close cooperation with national authorities has enabled us to today approve well-designed capacity mechanisms in six EU countries. They will foster competition among all potential capacity providers to the benefit of consumers and our European energy market.”

The Commission says that Germany’s and Belgium’s strategic reserves mechanisms will enable the countries to keep some generation capacities outside the electricity market for operation only in emergencies. Both countries will use this as a temporary measure until underlying market issues are resolved.

In Italy and Poland, the Commission has approved market-wide capacity mechanisms, where capacity providers receive payments for being able to generate electricity. The mechanisms in Italy and Poland are open to all types of capacity providers, including demand response, existing and new capacities, domestic and foreign, and will also be allocated via competitive auctions, helping to keep costs down.

In France and Greece, the Commission has approved capacity mechanisms specifically promoting demand response.

The Commission says that the schemes are “well designed” and would preserve competition in the single market.