Beyond National Generation Adequacy: Europeanizing the Building of Capacity Mechanisms?

Florence School of Regulation –

• Revenues of “standard” power generation assets in the EU are strongly impacted by massive renewables. Due concerns have emerged on the ability of “energy only” markets to ensure generation adequacy over the next decade. Some Member States are considering “national only” generation adequacy mechanisms, conceived to address issues that are specific to each Member State. Therefore it is not obvious that a common “regional” mechanism will spontaneously reach a consensus.
• “National autarkical generation adequacy policies” – if not contradictory – are inevitably expensive. Significant benefits can be achieved when sharing resources and managing the stress events at a multilateral scale. To be efficient all national adequacy policies should acknowledge the multi-lateral dimension of the adequacy issue in the EU, and take into account (either ‘explicitly’ or ‘implicitly’) the actual contribution of cross-border resources.
• However Europeans do not seem ready for this demanding Europeanization. Today the set of tools that we need is still to be defined before thinking about any implementation. We still have to deliver a proper Europeanization of the national adequacy mechanisms.
• How to do any coherent assessment of the EU and each Member State actual generation adequacy without an EU harmonisation of methodology, data base and scenarios? How should we allocate among various players the responsibilities for energy delivery, while the true contribution of interconnections can only be known in real-time, and results from a conjunction of conditions in different systems? And how to allocate energy at times of scarcity, considering efforts made through heterogeneous adequacy mechanisms? Can we combine any set of compatible economic incentives with the needed spirit of solidarity embodied in our EU treaty?

More