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Energy Security Concerns versus Market Harmony: The Europeanisation of Capacity Mechanisms

Author

Listed:
  • Merethe Dotterud Leiren

    (CICERO Center for International Climate Research, Norway)

  • Kacper Szulecki

    (Department of Political Science, University of Oslo, Norway)

  • Tim Rayner

    (Tyndall Centre for Climate Change Research, University of East Anglia, UK)

  • Catherine Banet

    (Scandinavian Institute of Maritime Law, University of Oslo, Norway)

Abstract

The impact of renewables on the energy markets–falling wholesale electricity prices and lower investment stability–are apparently creating a shortage of energy project financing, which in future could lead to power supply shortages. Governments have responded by introducing payments for capacity, alongside payments for energy being sold. The increasing use of capacity mechanisms (CMs) in the EU has created tensions between the European Commission, which encourages cross-country cooperation, and Member States that favour backup solutions such as capacity markets and strategic reserves. We seek to trace the influence of the European Commission on national capacity markets as well as learning between Member States. Focusing on the United Kingdom, France and Poland, the analysis shows that energy security concerns have been given more emphasis than the functioning of markets by Member States. Policy developments have primarily been domestically driven, but the European Commission has managed to impose certain elements, most importantly a uniform methodology to assess future supply security, as well as specific requirements for national capacity markets: interconnectors to neighbouring countries, demand side responses and continuous revision of CMs. Learning from other Member States’ experiences also play a role in policy decisions.

Suggested Citation

  • Merethe Dotterud Leiren & Kacper Szulecki & Tim Rayner & Catherine Banet, 2019. "Energy Security Concerns versus Market Harmony: The Europeanisation of Capacity Mechanisms," Politics and Governance, Cogitatio Press, vol. 7(1), pages 92-104.
    • Handle: RePEc:cog:poango:v:7:y:2019:i:1:p:92-104
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    References listed on IDEAS

    as
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    Cited by:

    1. Zajdler, Robert, 2020. "The role of capacity in the EU internal electricity market in the context of the general court's judgment of 15 November 2018. In case T-793/14 Tempus energy," Energy Policy, Elsevier, vol. 143(C).
    2. Kacper Szulecki & Dag Herald Claes, 2019. "Towards Decarbonization: Understanding EU Energy Governance," Politics and Governance, Cogitatio Press, vol. 7(1), pages 1-5.
    3. Kozlova, M. & Overland, I., 2022. "Combining capacity mechanisms and renewable energy support: A review of the international experience," Renewable and Sustainable Energy Reviews, Elsevier, vol. 155(C).
    4. Thomas Reverdy & Frédéric Marty & Ronan Bolton, 2021. "The redesign of electricity markets under EU influence: The capacity mechanism in France and Britain," Post-Print halshs-03475634, HAL.

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