Commission Decision (EU) 2020/348 of 24 October 2019 on the aid scheme SA.35980 – 2019/C United Kingdom – Electricity Market Reform: Capacity Mechanism (notified under document C(2019) 7610) (Text with EEA relevance)

• CELEX: Decision (EU) 2020/348
• Articles: 4

Article 1

The aid scheme in the form of the Capacity Market implemented by the United Kingdom pursuant to the Energy Act 2013 (‘the aid scheme’) is compatible with the internal market on the basis of Article 107(3)(c) of the Treaty. The Commission authorises the aid scheme for a maximum period of 10 years from 16 December 2014.

Article 2

In the event that the Court of Justice reverses the judgment of the General Court given in Case T-793/14 and decides to uphold Decision C(2014) 5083, Article 1 is replaced by the following:

‘Article 1

The proposed alterations to the aid scheme declared compatible by Decision C(2014) 5083, which were notified to the Commission on 12 September 2019 and are described in the Annex to this Decision are compatible with the internal market on the basis of Article 107(3)(c) of the Treaty, from the date of notification of this Decision until 15 December 2024.’

Article 3

This Decision is addressed to the United Kingdom of Great Britain and Northern Ireland.

Schedules & Appendices

ANNEX

ANNEX

CHANGES TO THE CAPACITY MARKET

(1)

First, the UK commits:

(a)

to reduce the minimum threshold to participate in the CM as described in recitals (30) and (31) of the present Decision to 1 MW for all auctions for which prequalification starts from January 2020, and

(b)

to reassess this threshold by October 2021 to examine the potential for a further reduction.

(2)

Second, the UK commits:

(a)

to endeavour to implement the direct participation of foreign capacity in auctions for which prequalification starts from January 2020, conditional upon cooperation agreements with the transmission system operators in the neighbouring countries where participating capacities are located; and, in any event,

(b)

to apply direct participation of foreign capacity for all auctions for which prequalification starts after the methodologies, common rules and terms mentioned in point 11 of Article 26 of Regulation (EU) 2019/943 have been approved by ACER and published on its website according to Article 27 of the above mentioned Regulation and have become applicable.

(3)

Third, the UK commits to develop all rules necessary (for instance, but not limited to de-rating factors) to ensure the effective participation of any new capacity type which can effectively contribute to addressing the generation adequacy problem, as soon as such capacity has the potential to contribute to addressing the generation adequacy problem.

(4)

Fourth, the UK commits:

(a)

to allow all types of capacities (except interconnectors) to apply to prequalify to bid for the various contracts lengths available if they can demonstrate they meet the capital expenditure (CAPEX) thresholds described in recital 75 of the present decision and;

(b)

to keep these CAPEX thresholds under review to ensure that they remain appropriate.

(5)

Fifth, the UK commits:

(a)

to continue procuring in the year ahead auctions at least 50 % of the capacity reserved four years earlier as part of the parameter setting process for the four year ahead auction for the same delivery year and;

(b)

to continue using the set-aside methodology based on a 95 % confidence interval described in recital 62 of the present Decision to determine the minimum amount of capacity that will be set aside for a year ahead auction.

(6)

Sixth, the UK commits to respect the provisions of Regulation (EU) 2019/943 and in particular to adopt by the end of 2020 regulatory changes to ensure that, from 1 July 2025 at the latest, generation capacity that started commercial production before 4 July 2019 and that emits more than 550 g of CO 2 of fossil fuel origin per kWh of electricity and more than 350 kg CO 2 of fossil fuel origin on average per year per installed kWe is not committed, does not receive payments or commitments for future payments under the Capacity Market.