Capacity Market—key features

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

  • Capacity Market—key features
  • Electricity market reform and the Capacity Market
  • Capacity Market—the basics of the mechanism
  • Implementation of the Capacity Market
  • The Capacity Market Rules
  • Amendments to the Capacity Market Rules
  • Latest changes to the Capacity Market
  • How the Capacity Market works, in a nutshell
  • CM legislation and CM Rules in more detail
  • Who are the key parties involved in the Capacity Market?
  • More...

Capacity Market—key features

Note: on 15 November 2018 payments under the Capacity Market mechanism and future CM support were suspended. This came as a result of the General Court issuing its judgment in Case T-793/14 Tempus Energy Ltd and Tempus Energy Technology Ltd v Commission (Tempus Judgment), 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 of the consequences of this, and links to further resources, see the final section of this Practice Note: 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.

Electricity market reform and the Capacity Market

The Capacity Market (CM) is one aspect of the government’s wider Electricity Market Reform (EMR) programme. EMR was designed and implemented with the aim of meeting three competing challenges to the Great Britain (GB) electricity market (often referred to as the energy ‘trilemma’):

  1. the need to intervene in the market to financially encourage development of

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