Europe needs capacity mechanisms!

At UFE’s initiative, 7 large associations of the German, Belgian, British, Irish, Italian, Portuguese and Spanish power sector published today a Joint Statement calling for an updated EU energy market design that includes both an Energy-only market and capacity mechanisms.

UFE, ASSOELETTRICA, BDEW, EA IRELAND, ELECPOR, ENERGY UK, FEBEG and UNESA underline that a market design relying only on short-term prices and a poor CO2 price will fail to trigger an efficient investment path, undermining the path towards a secure European energy transition at low-cost and failing to ensure a sufficient level of security of supply.
As such, the cosignatories call for the European Commission to swiftly improve and complete the “energy-only” with capacity mechanisms (generation, demand response or storage) ensuring the achievement of the targeted level of security of supply.
The European power associations stress in particular the need for:

• An updated European market design based on a combination of markets able to reveal the value of both low-carbon energy and capacity;
• Efficient, market-based capacity mechanisms able to deliver long-term price signals to complement the energy market;
• The recognition by the European Commission of the need for the swift implementation of such mechanisms;
• A consistent framework whose application must be systematic and non-discretionary.

They also support the implementation of regional capacity adequacy assessments, in addition to national ones, as well as a strengthened coordination of capacity mechanisms’ implementation at a European level.