The liberalization of the electricity market, the rise of renewable energy sources, the closure of ageing or environmentally harmful plants and an increasing share of energy coming from third countries, have caused concerns in many Member States with regard to security of supply. It prompted many Member States to introduce so-called capacity mechanisms, which remunerate capacity providers for having capacity available. Because in most cases State resources are deployed, these mechanisms tend to fall within the scope of EU state aid rules. In 2014, the Commission adopted the Energy and Environmental Aid Guidelines (EEAG) which included compatibility criteria for capacity mechanisms. In 2015, the Commission launched a sector inquiry into capacity mechanisms. The Final Report of this sector inquiry was published on the 30th of November 2016, as part of the Commission's ``Winter Package''. The Final Report refines the EEAG and forms a crucial addition to the legal framework regarding capacity mechanisms. The Winter Package equally contains a legislative proposal ``for the regulation of the internal market for electricity'', which lays down common rules for capacity mechanisms. This article will discuss the current legal regime on capacity mechanisms, in light of the recent Winter Package.
European Energy and Environmental Law Review