The UK’s Capacity Market has been initially suspended after the European Court of Justice annulled the European Commission’s decision not to object to the scheme.
However, the Department for Business, Energy and Industrial Strategy has said it intends to work closely with the European Commission to reinstate the scheme as soon as possible.
The ruling essentially prevents the government from holding future auctions and making payments under existing agreements.
Clean energy technology provider Tempus Energy challenged the decision to grant the UK’s Capacity Market with state aid approval, claiming that its very design unfairly discriminated against clean energy projects, paving the way for the market to be “dominated” by coal, gas and diesel generators.
Tempus claimed that the scheme privileges generation technologies over demand-side response in a “discriminatory and disproportionate manner”, adding that the European Commission could not have concluded that there were no doubts surrounding the scheme on the basis of a preliminary examination.
And today the General Court of the European Union ruled in Tempus’ favour, annulling the European Commission’s decision not to raise objections to the scheme.
The ruling said that the EC should have had doubts over certain aspects of the scheme and initiated a formal investigation to properly assess its compatibility with state aid rules.
The UK now has two months to appeal the ruling before the Court of Justice.
In a statement issued this morning, Tempus Energy chief Sara Bell said that the ruling meant that a “customer revolution is on the cards”.
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