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Tempus Energy Ltd and Tempus Energy Technology Ltd v EC

The Commission should have had doubts in respect of certain aspects of the planned aid scheme and should have initiated a formal investigation procedure in order better to assess its compatibility

On 23 July 2014, the Commission decided not to raise objections to the aid scheme establishing a capacity market in the UK, on the ground that that scheme was compatible with the EU rules on State aid.

Through that aid scheme, which was formally notified to the Commission one month earlier on 23 June 2014, the UK intends to remunerate capacity providers that commit to provide electricity or reduce or delay their electricity consumption during times of system stress. The legal basis for that scheme is the UK Energy Act 2013 and the regulatory acts adopted on the basis of that Act.

In order to guarantee security of supply, the UK considered that it was necessary to establish such a capacity market. For the UK, the electricity available was at risk of being insufficient in the near future for the purposes of satisfying high-demand periods. The oldest generating plants will be closing, and the electricity market is at risk of failing sufficiently to encourage generators to develop new generation capacities to make up for those closures. The UK concluded additionally that the electricity market did not offer sufficient encouragement to consumers to reduce their demand in order to remedy the situation.

The fundamental objective of the market is to encourage capacity providers, that is to say, principally, both electricity generators (power plants, including those using fossil fuels) and demand side response operators, who offer a service whereby consumption is rescheduled or reduced, to take into account the difficulties that may arise during high-demand periods.

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Original article link: https://curia.europa.eu/jcms/upload/docs/application/pdf/2018-11/cp180178en.pdf

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