The role of capacity markets in the electricity market transition

The European Commission presented two proposals on Electricity Market Design as part of its Clean Energy Package of November 2016.

Discussions on the package have tended to focus on the level of ambition, in particular Renewable Energy and Energy Efficiency targets. The European Parliament supports higher targets while Member States lean towards a more cautious approach, setting the scene for tense negotiations.

Meanwhile, European electricity markets are undergoing structural changes due to rising demand for capacity, the gradual phase out of coal and funding restraints. New investments are insufficient to bridge the gap.

This raises several questions about the future of capacity mechanisms in the EU. How should they be designed not only to ensure security of supply and preserve competition in the Single Market, but also to support market reforms, renewable energy integration and promote emerging demand response technologies. Lessons learnt from the Member States are an important part of that discussion.

More than a year after the publication of the Clean Energy Package, EURACTIV organised this forum on the future of the EU power industry. Questions included:

  • What is the way forward for the Clean Energy Package?
  • What are the lessons learnt from existing capacity markets in Europe?
  • Can European power markets exist without capacity mechanisms?
  • How should they be designed to strengthen the goals of the Energy Union?

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