Spanish capacity market faces legal challenge

13 August 2017

Sian Crampsie

Two Spanish non-governmental organizations (NGOs) have submitted a complaint to the European Commission alleging that Spain’s capacity market system contravenes state aid laws.

Supported by Client Earth, the complaint by Spanish organizations IIDMA and Px1NME says that two capacity mechanisms used in Spain’s market cannot be justified because there is no common interest objective and the aid – amounting to around €700 million per year – is disproportionate.

The capacity mechanism system is designed to ensure that Spain has enough electricity generating capacity to meet demand. According to the complaint, the aid cannot be justified to cover Spain’s electricity demand.

Piet Holtrop, lawyer for Px1NME, said: “Despite the overcapacity of electricity generation in Spain, the owners of coal and gas plants have unduly received multi-million Euro subsidies since 1997.”

Renewable energy is excluded by law from receiving this kind of aid. The Spanish government also failed to notify the European Commission about the aid to gain the necessary approval, say IIDMA and Px1NME.

If the Commission finds the aid is unlawful, the electricity companies will have to pay back more than €3 billion, the amount received between 2011 and 2015, according to the Comisión Nacional de los Mercados y la Competencia (CNMC).

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