(Secretary of State for
Business, Energy and Industrial Strategy): As set
out to the House in the statement of 6 December 2018, the
European Commission was expecting to make its initial decision
regarding the UK Capacity Market in early 2019. The Commission
have today confirmed that they are moving onto the next phase of
its investigation into the Capacity Market. This is an important
first step as we work to reinstate State aid approval for the
Capacity Market as soon as possible.
In their announcement the Commission confirm that the General
Court of the European Union did not rule that the GB Capacity
Market was incompatible with State aid rules. The Commission have
also made clear that the Court ruled on procedural grounds. This
was on the basis that the Commission should have opened an
in-depth investigation on certain elements of the scheme related
to participation by demand side response operators.
In accordance with the Court’s judgment, the Commission have
therefore launched a further investigation focussing on
particular elements of the Capacity Market. We understand that
this investigation will cover past and future capacity payments,
including deferred payments in respect of the standstill period.
Since 2014 the Commission has approved State aid for six capacity
markets similar to the GB scheme. We will continue to work
closely with the Commission as their investigation progresses and
will ensure that market participants are regularly updated.
Separately, the Commission have recently chosen to appeal the
General Court’s judgment that they did not follow the proper
process to conclude in 2014 that the Capacity Market was
compatible with EU State aid rules. I can confirm today that the
UK Government will be supporting this appeal. The appeal does not
affect the Commission’s separate process for considering State
aid approval for the current Capacity Market scheme
