State aid: Commission approves joint capacity mechanism for Ireland and Northern Ireland

The European Commission has approved under EU State aid rules the new capacity mechanism for the jointly operated Irish and Northern Irish electricity market. Under the capacity mechanism, power plants and othercapacity providers will obtain a payment for being available to generate electricity or, in the case of demand response operators, for being ready to reduce their electricity consumption to help balance demand with supply. It helps to ensure that there is sufficient capacity to meet electricity demand at all times in Ireland and Northern Ireland. Commissioner Margrethe Vestager, in charge of competition policy, said: “The joint Irish and Northern Irish capacity mechanism will help ensure security of electricity supply in the years to come. I think it is a good thing that this mechanism is operated across national borders and fosters competition among all potential capacity providers, to the benefit of consumers.” The Commission assessed the measure under the 2014 Guidelines on State aid for environmental protection and energy. It concluded that the capacity mechanism complies with EU State aid rules, in particular because it is open to all potential types of capacity providers, including demand response. Furthermore, the measure will keep costs for consumers in check thanks to the regular, competitive auctions to allocate capacity contracts. The press release is available online in EN, FR, DE, GA.