Capacity Agreements and the rights and obligations of those who win Capacity Market support
Capacity Agreements and the rights and obligations of those who win Capacity Market support

The following Energy practice note provides comprehensive and up to date legal information covering:

  • Capacity Agreements and the rights and obligations of those who win Capacity Market support
  • The Capacity Market
  • Capacity Agreements
  • The legal nature of a capacity agreement
  • Types of Capacity Market Units (CMUs)
  • The content of Capacity Agreements

Note: on 15 November 2018 payments under the Capacity Market mechanism and future Capacity Market support were suspended. This came as a result of the General Court issuing its judgment in Tempus Energy Ltd and Tempus Energy Technology Ltd v Commission (Tempus Judgment (see LNB News 15/11/2018 90 for analysis of the judgment itself)), annulling the Commission’s decision of 23 July 2014 which found that the aid scheme establishing a capacity market in the UK was compatible with the EU rules on State aid.

For detailed analysis and links to further resources on this, see Practice Note: Capacity Market—key features—Suspension of the Capacity Market following the Tempus State aid judgment (15 November 2018). On 24 October 2019, the Commission re-confirmed its original July 2014 decision to grant State aid approval for the GB Capacity Market, enabling it to be restored and payments that have been suspended since November 2018 to be made. As a result of this development, this Practice Note is currently under review.

The Capacity Market

The Capacity Market (CM) is one aspect of the government’s Electricity Market Reform (EMR) programme. It is a legislative mechanism which aims to encourage the provision of reliable electricity capacity, in order to avoid future shortfalls in available electricity. This Practice Note focuses on rights and obligations afforded to those who are successful in the prequalification and auction

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