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EU states must cooperate on electricity generation capacity payments - ENTSO-E

28 Sep 2012 17:54:15 | edem

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The head of the European grid operators' group said capacity mechanisms are a "deadly weapon" to make electricity markets more competitive, but lamented that EU member states are not working together to develop consistent policies.

Speaking at a National Grid conference in London on Thursday, European Network of Transmission System Operators for Electricity (ENTSO-E) president Daniel Dobbeni urged greater co-operation between EU governments in the rollout of new generation and measures to balance power grids.

"Not a single country in the EU is talking to other countries about investment in generation. We already have 27 different renewables subsidies - and we should avoid having 27 different capacity mechanisms at all costs," he said.

Governments all over Europe are examining capacity mechanisms to ensure peak demand is met, particularly with oversupply because of economic low demand and more renewable generation cutting into thermal generation's share of the market.

Germany is debating a comprehensive capacity mechanism (see EDEM 16 August 2012), as is France (see EDEM 6 September 2012). Italy has finalised a capacity payment mechanism, with criteria published by the end of November (see EDEM July 2012).

UK capacity plan in November

UK Department of Energy and Climate Change (DECC) energy markets and networks director Jonathan Brearley said details of auction design, contract length and penalties for failing to honour contracts would be unveiled in early November when the electricity market reform bill is introduced into parliament.

Referring to the UK plan, ENTSO-E's Dobbeni accused DECC of failing to involve neighbouring countries in developing the policy. "I'm pretty sure the UK didn't check with Belgium about this electricity market reform," he said.

Dobbeni's views echo comments made by European Commission deputy director-general for Energy Fabrizio Barbaso earlier this week. Barboso told ICIS that capacity mechanisms developed by individual countries could endanger the move to a single European electricity market in 2014 (see EDEM 25 September 2012). KB

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