Dr Christoph Riechmann of Frontier Economics presented today at a meeting of the Chairmen of the Energy Regulators Regional Associaton (ERRA) in Bratislava, Slovakia. The meeting focused on the European Commission’s (EC) inquiry into and consultation on a new electricity market design.
Christoph gave an overview of the policy debate in Europe on whether to use energy-only markets or capacity markets to remunerate plant investment. He outlined the implementation status of capacity markets in a number of EU countries and the insights generated. He then went on to assess the status of two EC investigations into market design. Christoph pointed out that the EC would allow member states to make use of politically-mandated capacity markets under certain conditions:
- a generation adequacy study has to identify a capacity gap;
- a market failure needs to be identified, and;
- the capacity mechanism needs to address the identified failure and the mechanism needs to be open for participation from other EU member states.
Frontier advises private companies, public institutions and regulators on market design for the European electricity market.
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