Capacity Mechanisms and State Aid Control

This chapter considers the application of the Treaty state aid rules to scrutinize funding of national capacity remuneration mechanisms. State aid control has been a key instrument to ensure national financial support to ensure generation adequacy does not frustrate the over-riding objective of completing the internal energy market. The Commission’s has used its powers to launch a sector- wide inquiry into support for CRMs, and has subsequently adopted detailed ‘soft law’ guidelines to assess the compatibility of national support measures to promote generation adequacy and reliability. Since 2014, it has adopted several controversial decisions—some of which have now been subject to challenge before the CJEU. The role of the guidelines to harmonize national approaches to the need for CRMs have to some extent been overtaken by legislation but many open questions remain—even following the recent adoption of a new set of guidelines at the end of 2021.