Summary:
We acknowledge the publication of the Interim Report and the Annexed Staff Working Document as a huge contribution to enhance the design of Capacity Remuneration Mechanisms (CRMs) so as to minimise their «friction» with the Internal Energy Market (IEM). In order to fully seize the potential benefits of market integration, a minimum level of coordination in the security of supply dimension is necessary. Most of current CRM designs implemented or under proposal in the European Union are still based on an autarkic vision, according to which domestic resources must be capable of guaranteeing the security of electricity supply on their own. However, capacity remuneration mechanisms are going to critically condition the investments that will «shape» future European power sectors (indeed, this is why they are ultimately designed for). If cross-border resources are not allowed to fully participate in CRMs in a level playing field with domestic resources, each system will develop in isolation and the scope of the Internal Energy Market will be limited to a short-term market for «left-overs». The Interim Report and the Annexed Staff Working Document provide a much-needed assessment on the introduction of CRMs in the European Union, as well as a platform for discussion and creation of a common understanding of the main involved problems.
We share the assumptions on which the report is based and we agree with most of the tentative conclusions. Nevertheless, we have some comments, mainly regarding cross-border participation in CRMs, but touching also other issues, which we would like to share with the editors. Most of our inputs are related with eligibility and product design, according to the terminology used in the documents under consultation. Before entering into details, we briefly summarise hereunder our views on cross-border participation and other CRM-design issues.
Keywords: European Union; European Commission; sector inquiry; capacity remuneration mechanisms; resource adequacy; cross-border participation; explicit penalties.
Registration date: 19/12/2016
IIT-16-173A
Download paper