The European Commission fears that capacity mechanisms would just translate into subsidies for coal power plants. Therefore, installations exceeding emission limits should not take part in support schemes, according to a proposal under the Energy Union’s Winter Package. EurActiv Czech Republic reports.

A new electricity market design proposed by the European Commission aims to ensure that stronger price signals will motivate power companies and the industry to invest in their generation units or capabilities for demand response.

“National market rules like price caps and state interventions currently hinder prices from reflecting when electricity is scarce,” the Commission said in the draft regulation on the internal power market, a part of the Winter Package.

That means member states will have to accept that price caps are removed from the EU electricity market and prices may become significantly high at certain moments.

Markets of individual member states or regions should also be better integrated, as current price zones do not always reflect actual scarcity and follow political borders instead, the Commission explained.

“If there is a strong demand in some area, for sure the price should be high to attract trade into this region,” Oliver Koch from the Commission’s DG Energy said at the SET Plan – Central European Energy Conference (CEEC) in Bratislava, held in the first week of December.

“You can organise a market in a national manner if you wish, but one thing is clear – it will be tremendously more costly. It is difficult to cooperate, but there is no other alternative,” he warned.

Read full article at EurActiv.com: http://www.euractiv.com/section/energy/news/commission-and-member-states-clash-over-capacity-mechanisms/

 

 

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