Posted on: 11/12/2018
The UK government has said it plans to run T-1 Capacity Market ‘top-up’ auction next summer as it continues to look for the mechanism to be reinstated as soon as possible.
The Government said it is working closely with the European Commission for the investigation into the scheme to be concluded as soon as possible after it was suspended following a European court ruling over state aid.
The T-1 top-up auction announced will be for delivery in winter 2019/20, and any agreements will be conditional on the outcome of the Commission’s formal investigation. The UK government will shortly consult on necessary regulatory changes to allow for the possibility of a T-1 auction.
In an update on the Capacity Market BEIS stressed the court did not find the design of the scheme to be incompatible with State aid guidelines.
“As such, we are exploring together with the Commission the most rapid and effective path to conduct the formal investigation into the scheme in a way that meets all process requirements referred to in the judgment.
The Commission envisages issuing an Opening Decision to open the formal investigation in early 2019. Subsequently, third parties will be able to submit comments on the decision.”
National Grid continuing to operate scheme
It said one possible outcome of the investigation that the Commission reaches a positive decision after its investigation.
“This would mean that aid granted under the Capacity Market before the judgment would be considered compatible with the internal market, the results of all auctions to date would stand, and further auctions could be held.”
At the request of the UK government, National Grid is continuing to operate the Capacity Market scheme in the meantime, short of making payments, to ensure that capacity providers may be eligible for deferred payments after the standstill period.
“We are working closely together with the Commission to ensure that the Commission has everything necessary to enable it to re-consider the case for approval of the CM scheme as quickly as possible,” it added.