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ARTICLES – ENERGY AND STATE AID CONTROL ∙ When Sisyphus Gave Up: Capacity Markets and State Aid in the EU

DOI https://doi.org/10.21552/estal/2017/1/8

George Anstey, Soren Christian


The myth of Sisyphus is one of fruitless exertion, in which the eponymous hero repeatedly rolled a boulder to the top of a hill for all eternity. After three packages and repeated efforts to reform the electricity market, one could forgive the European Commission for feeling a little like Sisyphus. The results of its Sector Inquiry into capacity mechanisms, published in November 2016, accompany plans for further reforms. Provided that Member States are embarking on those reforms, the Commission may find capacity mechanisms compatible aid. In this paper we review the Commission’s proposals for the design of compatible capacity mechanisms in the light of international experience of capacity markets. We find that the Commission’s proposals risk designing capacity mechanisms only for the perfectly efficient electricity markets in which they would be redundant.
Keywords: Capacity Markets; Generation Adequacy; Security of Supply; Electricity Market Reform.

George Anstey, Associate Director, NERA Economic Consulting, London; Soren Christian, Economic Analyst, NERA Economic Consulting, London. DOI: 10.21552/estal/2017/1/8

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