EC approves electricity capacity mechanisms

EUROPE: The European Commission has approved electricity supply subsidies in six member states, including a controversial support scheme in Poland.

Capacity mechanisms were agreed under state aid rules in Belgium, France, Germany, Greece, and Italy (pic: Elia)

Environmentalists warned a €1bn a year mechanism to support conventional electricity generation in Poland would be an effective subsidy for coal.

Climate Action Network (CAN) Europe said the decision severely undermined the EU’s ability to meet its Paris climate commitments.

Capacity mechanisms were also agreed under EU state aid rules in Belgium, France, Germany, Greece, and Italy.

The Polish scheme was approved for ten years to ensure electricity supply while the government implements market reforms to address structural supply risks.

Under the mechanism, capacity providers — awarded by auction — will receive payments for being available to generate electricity, and demand response providers for being available to reduce consumption.

A market-wide capacity mechanism was also approved for Italy, while strategic reserve schemes were agreed for Belgium and Germany and demand response schemes in France and Greece.

Competition commissioner Margrethe Vestager said the "well-designed" capacity mechanisms would safeguard security of supply without distorting markets.

Green lawyers group ClientEarth said that while the Polish mechanism complies with EU state aid law by giving preferential treatment to lower-carbon energy sources, much of the money would still support coal. "It is ultimately a framework designed to prop up coal," said lawyer Sam Bright.

Coal policy coordinator at CAN, Joanna Flisowska, said the Commission’s decision to approve "unprecedented" coal subsidies was inconsistent with the need to phase out the fossil fuel by 2030.

"It is a huge sell-out to the Polish coal industry," she said.

Flisowska called on the Commission to preclude "the biggest polluters" from receiving public funds in negotiations on the clean energy package.

Market design rules in the package, currently being negotiated by legislators, could restrict which plants can receive support from capacity mechanism.

Poland has opposed Commission proposals that would effectively rule out state support for new coal plants.

Parliament’s industry and energy committee is expected to vote on its position on 21 February before negotiations begin between MEPs and the Council.

First published on Ends Europe