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Over £1bn paid out to capacity providers following CM reinstation

Image: Getty.

Image: Getty.

Capacity providers have received £1 billion in deferred Capacity Market (CM) payments, the Electricity Settlements Company (ESC) has said.

The CM was reinstated in October by the European Commission, following an investigation into its state aid compliance.

It was suspended in 2018 after a European Court of Justice ruling that the EC had erred on procedural grounds in granting state aid approval in July 2014.

This came as a result of the case launched by Tempus Energy, which claimed the mechanism inherently favoured some forms of generation over others.

The full settlement of the deferred payments for the period of suspension have now been awarded.

The ESC has praised the "excellent communication" with the market as being key to the restart being a smooth process.

It has collected sufficient funds to pay capacity providers, but a small number of suppliers are yet to pay their full contribution under CM regulations, it said.

The ESC is to pursue debt recovery action “where necessary” and any funds received are to be distributed to all suppliers that received a mutualisation invoice.

Neil NcDermott, CEO of the Electricity Settlements Company, said the restart of the CM has been a “challenging project with no precedent to follow”.

“It is therefore very heartening that we have been able to issue standstill payments in full and on time, boosting investor confidence in the Capacity Market,” McDermott continued, adding that the cooperation of its partners, in particular suppliers, led to over 99% of invoiced funds being collected within 15 days.

Pre-qualification results for the next T-1, T-3 and T-4 auctions showed a strong growth for demand side response, as well as the first ever inclusion of a solar farm.


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