EREF: Capacity markets detrimental to the development of renewables

28 January 2016, Brussels – The European Renewable Energies Federation (EREF) has called upon EU Member States to abandon capacity mechanisms, labelling them a charade that provides support and protection to fossil and nuclear power production, slowing the integration of renewables.

A number of Member States operate national capacity markets in order to safeguard against blackouts and encourage investment. However, EREF argues that incumbent power generators are the main beneficiaries of a system which enables old and inflexible installations to remain open when no longer profitable. The markets are state aid “in disguise”.

With an eye on the new Renewable Energy Directive and future energy market design, the European Commission opened a state aid sector inquiry into capacity mechanisms in eleven Member States in 2015. The probe, expected to report in the summer, is investigating whether measures favour particular producers or technologies, or create obstacles to trade across national borders.

Instead of capacity mechanisms, more demand side and flexibility options can ensure long term stability in Europe, while also promoting renewables, according to EREF. Investment in modern RES installations, improved interconnections and increased storage capabilities should be encouraged alongside the short-term phasing out of subsidies for coal and nuclear energy.

Read the full statement here.

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