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Market Insight

UK Capacity Market suspended following European Court of Justice ruling.

December 12, 2018  | Subscribers Only

Mike Longson Mike Longson Research Analyst, Solar and Energy Storage - IHS Markit
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The European Court of Justice has ruled in favour of Tempus Energy, a software provider for Demand Side Response (DSR), that the design of the United Kingdom’s capacity market mechanism was seen to favour large-scale conventional generation instead of other distributed, lower emission energy resources and DSR. As a result, the T-1 and T-4 auctions scheduled for January and February 2019 to procure capacity for the winters of 2019/2020 and 2022/23 respectively have been suspended pending the results of further investigation. As part of the suspension, no payments for existing contracts will be paid. Following a recent update there will be a T-1 auction in the summer of 2019 replacing the January auction. The result will still be subject to the investigation results by the European Commission. IHS Markit believes the ruling is creating investment uncertainty for energy storage projects already having secured capacity market contracts, but in the long-term the potential re-design of the market could favour smaller, distributed energy resources and flexible loads including energy storage.

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