Description:The European Commission is conducting an inquiry into capacity payments mechanism. This coincides with the EU's aim to create a single Energy Union. A CPM is a mechanism to reimburse generators for their capital costs and compensate for generators providing back-up generation and electricity consumers for reducing energy demand at times of system stress.
Implication(s):A number of Member States across the EU provide CPMs. The European Commission is working towards publishing a legislative proposal by the end of 2016 that would provide uniformity of approach in the implementation of such schemes, while also taking account of national circumstances.
Current Position:The response to the questionnaire points to the significant and growing penetration of variable electricity on the island and the need to ensure that there is sufficient thermal capacity to provide the necessary back-up. In order to comply with EU legislation, the all-island electricity market is in the middle of a re-design which will also alter the nature of the current CPM.
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Last Updated: 09/28/2015