The UK’s most abundant fossil fuel generators may be back in line for almost £1bn in backup power grants this winter after the European Commission accepted the UK’s flagship energy arrangement, which was ruled illegal last year.
A shock European court ruling brought the government’s “capacity market” to a halt last November, activating an in-depth investigation into whether the UK’s strategy to pay power plants to stay open was well-matched with EU state aid law.
The commission’s green light is supposed to clear the way for expenditures of around £990m to the owners of Britain’s gas, coal, and nuclear power plants to ensure they will keep the lights on this winter.
Andrea Leadsom, the business secretary, stated she expected that the capacity market would also reimburse back £1bn owed to producers for last winter when the capacity market was put off.
Leadsom stated the commission’s approval should allow the capacity market to resume its role as the UK’s principal tool for promising the UK’s security of supply. The decision gave confidence that its design was fit for purpose, she stated.
Under the arrangement, energy companies bid years in advance for bill payer-funded grants to provide backup power at crunch times during winter. It was permitted by the European commission in 2014 but called into inquiry last year after the energy startup Tempus Energy effectively appealed to the European court of justice against the agreement.
Tempus Energy stated the policy put energy-saving arrangements at a disadvantage by overlooking the likelihood to balance the energy system using actions that reduce energy demand in support of ramping up energy supplies.