State aid: Commission approves the British Capacity Market scheme

Following an in-depth investigation, the European Commission has approved under EU State aid rules the British Capacity Market scheme introduced in 2014 to safeguard security of electricity supply.  In July 2014, the Commission found the British Capacity Market scheme to be compatible with EU State aid rules. In November 2018, the General Court annulled the Commission’s decision on procedural grounds. While the General Court did not rule on the compatibility of the scheme with EU State aid rules, it considered that the Commission should have opened an in-depth investigation. The Commission appealed the General Court’s judgment, but this appeal did not suspend the effects of the ruling. In order to give effect to the judgment and since the UK expressed its intention to maintain the Capacity Market scheme, the Commission, in February 2019, opened an in-depth investigation to reassess the compatibility of the scheme with EU State aid rules.  The Commission’s investigation confirmed that the British Capacity Market scheme covering the period 2014-2024 complies with EU State aid rules, in particular with the 2014 Guidelines on State Aid for Environmental Protection and Energy. In particular, it confirmed that the scheme is necessary to guarantee security of electricity supply in Great Britain, is in line with EU energy policy objectives, and does not distort competition in the Single Market. Considering recent market and regulatory developments, the UK has also committed to implementing certain improvements to the scheme for the future.