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Commission opens investigation into Belgian capacity mechanism

Christian Fernsby ▼ | September 22, 2020
The European Commission has opened an in-depth investigation to assess whether a Belgian capacity mechanism to safeguard security of electricity supply is in line with EU State aid rules.
Belgium street
Commission   Belgium street
Belgium notified the Commission of its plans to introduce a national market-wide capacity mechanism to incentivise energy capacity providers (both generators and demand side response operators) to offer their availability to the transmission system operator (TSO). The capacity mechanism would replace the Belgian strategic reserve that the Commission approved under EU State aid rules in 2018.

Topics: Belgian

Under the capacity mechanism, the beneficiaries would be selected though a competitive bidding process and would be remunerated for their availability. The support would take the form of a capacity payment for the duration of the capacity agreement (which would range between one and 15 years). In exchange, the successful bidders would give their availability to the TSO during stress events experienced by the electricity system.

With the capacity mechanism, Belgium aims at ensuring security of electricity supply, in particular in view of its decision to phase-out of all nuclear capacity by 2025. More specifically, the objective of the scheme is to ensure that there is sufficient capacity for the production of electricity and that such production meets the demand (so-called “resource adequacy”).