Capacity Market: carbon dioxide emissions limits

On 4 July 2019, the Recast EU Electricity Regulation came into effect as part of the EU’s Clean Energy Package. The Regulation introduced a requirement for capacity mechanisms to put carbon dioxide emissions limits in place.

In order to comply with these limits in respect of new-build capacity and unproven DSR seeking to prequalify for the capacity auctions in early 2020, amendments to the Capacity Market Rules came into force on 18 July 2019. The government is now seeking views on how to most effectively implement the remainder of the provisions, in respect of existing capacity.

The proposed changes are intended to ensure existing capacity or DSR components that do not comply with the limits (such as coal, diesel, and possibly some inefficient gas generation) cannot receive capacity payments from the date of 1 July 2025.