will capacity markets disappear in the UK? could Spain do the same?

15 November, 2018

Cleantech innovator Tempus Energy has successfully challenged a UK subsidy scheme that allows fossil fuels to dominate the market. The European Court delivered the landmark ruling today. 

According to Sara Bell CEO of Tempus Energy  “This ruling should ultimately force the UK Government to design an energy system that reduces bills by incentivising and empowering customers to use electricity in the most cost-effective way – while maximising the use of climate-friendly renewables”.

The UK’s National Grid caters for ‘peak demand’ scenarios via the Capacity Market established by the UK Government in 2014. Tempus Energy brought its challenge on the basis that the design of this market ensures profits for coal, gas and diesel generators, leaving cheaper, cleaner alternatives virtually unable to compete.

Spain could take this ruling very seriously because it was one of the first to introduce capacity payments in 1997. And fossil fuel utilities, like those in Germany, are suddenly keen to promote capacity markets as a new, additional source of revenue as they struggle to compete with the growth of renewable power. The Instituto Internacional de Derecho y Medio Ambiente: IIDMA and La Plataforma por un Nuevo Modelo Energético (Px1NME), with the help of Client Earth, lodged the complaint  saying that the payments to power plants are made apparently without reason. 

According to Greenpeace Spain is the country with more type of capacity payments in Europe and the one that subsidized the most fossil fuel plants.