Capacity mechanisms in EU Law: A comment on the free movement of goods

The EU internal market in electricity is experiencing challenges in ensuring resource adequacy through the operation of the energy-only market alone. To guarantee the uninterrupted availability of affordable electricity, many Member States have adopted national capacity mechanisms, which compensate for the availability and readiness of existing and forthcoming generation capacity to supply electricity.  These national security of supply instruments conflict with internal market integration, and the EU legal framework established to facilitate such integration, because they tend to allocate public funding to national generation capacity instead of incentivizing cross-border solutions to ensure resource adequacy. This comment examines Member States’ capacity mechanisms in the context of the EU rules on free movement, which offer the most powerful legal means to further internal market integration. The legal analysis demonstrates that EU law acknowledges Member States’ need to intervene when the markets fail to deliver resource adequacy. However, EU law also aims to restrict such State intervention to that strictly necessary to ensure the uninterrupted availability of affordable electricity.

By: Kaisa Huhta

Latest Tweets from @OxfordEnergy

  • Electricity Markets in MENA: Adapting for the Transition Era https://t.co/DcKlQM11iE

    June 25th

  • OIES quarterly gas review compares companies’ levels of oil and gas production https://t.co/3JZh6hfatV https://t.co/5s5u5EIMNw

    June 25th

  • OIES publishes its new gas quarterly review: With the smallest spread between Gazprom realised price and NBP since… https://t.co/aJMozV6lUe

    June 24th

Sign up for our Newsletter

Register your email address here and we will send you notification of new publications, comment, articles etc. automatically.