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• EU: European Commission launches state aid sector inquiry into capacity mechanism schemes • UK: Government publishes revised guidance on appeals under the CRC Energy Efficiency Scheme
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ENERGYQUOTE JHA
5th MAY 2015
GREENTUESDAY• Data Management• Legislation• Compliance
energyquote.comA Unique Perspective
EU: European Commission launches state aid sector inquiry into capacity mechanism schemesOn 29 April 2015, the European Commission launched a state aid sector inquiry into the way 11 EU governments subsidise utilities to ensure against blackouts and support the rollout of renewable energy technologies, concerned that such support schemes may breach state aid rules.
Capacity mechanisms are used in some EU countries, such as Britain and France, to fund electricity generation that may not be cost-effective, but is needed to guarantee supply during peak demand. Capacity mechanisms reward power companies, mainly gas and coal stations, for the amount of power they can produce, rather than by buying the energy they actually generate.
UK excluded from initial investigation but probe could be expandedThe UK is excluded from the initial investigation, which focuses on Belgium, Croatia, Denmark, France, Germany, Ireland, Italy, Poland, Portugal, Spain and Sweden. However, if the Commission concludes capacity mechanisms are distorting competition or trade in the EU Single Market the State Aid probe could be expanded.
Capacity mechanisms, such as that introduced in the UK last year, seek to minimise the risk of energy shortfalls by offering subsidies to energy companies to keep sufficient back-up power available. Advocates of the approach argue it is necessary to stop energy companies shuttering gas and coal plants that may be needed to provide back-up power capacity that will be required as the grid relies more heavily on intermittent renewable energy supplies.
However, the approach has sparked criticism in some quarters, with campaigners arguing the UK scheme could hand subsidies to coal plants that need to be closed down under the government’s decarbonisation plans.
Developers of so-called demand response schemes that seek to provide back-up power capacity by automatically reducing demand at peak times have also argued that while they can access subsidies through the scheme the mechanism has been designed in a way that benefits large energy suppliers.
A Unique Perspective | Green Tuesday | 05.05.2015
Capacity mechanisms used in some EU countries to fund electricity generation may not be cost-effective
Capacity mechanisms seek to minimise the risk of energy shortfalls
It is argued that the mechanism has been designed in a way that benefits large energy suppliers
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A Unique Perspective | Green Tuesday | 05.05.2015
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Next Steps: European Commission will invite comments on findingsThe European Commission said it will invite comments on its preliminary findings before the end of 2015 and will publish the final results of the initial phase of the inquiry by mid-2016.
UK: Government publishes revised guidance on appeals under the CRC Energy Efficiency SchemeOn 24 April 2015, the Department of Energy and Climate Change (DECC) published revised guidance for appeals under the CRC Energy Efficiency Scheme (CRC). The guidance explains how the appeals process has changed, following simplification of the CRC by the CRC Energy Efficiency Scheme Order 2013.
The guidance explains appeals relating to the:
• First Phase (also known as the Introductory Phase or Phase 1, which ran from 1 April 2010 to 31 March 2014). Appeals in relation to the First Phase will be heard under the procedure set out in the CRC Energy Efficiency Scheme Order 2010.
• Initial Phase (also known as Phase 2 or Second Phase, which runs from 1 April 2014 to 31 March 2019) and subsequent phases, under the procedure set out in the CRC Energy Efficiency Scheme Order 2013.
The CRC Order 2013 simplified the CRC, including the appeals process, for the Initial Phase onwards. The main changes in the process are:
• Appeals in England and Wales will be heard by the First-Tier Tribunal.
• Calendar days, instead of working days, will be used to calculate dates in the appeal process.
• The number of days in which to appeal will be determined by where the appeal is lodged in the UK. In England and Wales, there are 28 calendar days within which to make an appeal.
The results will be published of the initial phase of the inquiry by mid-2016
The guidance explains how the appeals process has changed, following simplification of the CRC
The CRC Order 2013 simplified the CRC, including the appeals process, for the Initial Phase onwards
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