On Thursday 15 November, the European Court of Justice (ECJ) ruled that the European commission had failed to launch a proper investigation into the UK’s capacity market when it cleared the scheme for state aid approval in 2014 and, as such, has been suspended temporarily - the UK now has two months to appeal the ruling before the Court of Justice.
The scheme, was claimed to be to unfairly discriminate against clean energy projects, paving the way for the market to be “dominated” by coal, gas and diesel generators on the basis of differences in length of capacity market contracts that are available for certain applicants.
This landmark ruling could pave the way for more access to the capacity market for demand-side response operators. However, the short-term implications for all market participants are not yet fully clear. Payments under capacity market agreements have been suspended, together with the upcoming T-4 and T-1 Auctions for delivery years 2022/23 and 2019/20 and concern has been raised that payments already made under the capacity market agreements may need to be clawed back.
Labour said the ruling meant that the government would have to rethink the capacity market.
Read the full judgement here.