UK Regulator says EU moving too slowly on power generation policy

• 11 years ago (2013-04-24)
• David Flin

Europe 1061

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Alistair Buchanan, the outgoing Chief Executive of Ofgem, the UK regulator, said at a conference in Dusseldorf that the European Commission is moving too slowly on power generation policy. He said that the EC is looking at electricity market coupling and harmonisation, but it was slow going, and some of the timetables “are frankly quite heroic.” He added: “I’ve said before that the Brussels ‘train’ is moving too slowly in respect to gas policy, but I think it is even more the case for power generation.”

The European Commission was trying to take a lead on the issue of capacity mechanisms to ensure security of electricity supply, but again, the speed of progress was too slow for member states, according to Buchanan. “While European legislation on industrial emissions was having a profound impact on UK electricity, Article 194 places energy with the member states, and I would argue that policy is clearly being driven by them now. Were Brussels to try and force the capacity mechanism approach into some sort of binding EU requirement, you’ll see some fireworks between the member states and Brussels.”

Buchanan said that this was not because of the concept of EU-level intervention, “but because Brussels is working at a different speed, and the train that is hurtling towards the wall in Britain does not allow for that extra time, nor does it in Belgium, nor I think does it in Germany.”

Marco Garbers, market design and regulation expert with RWE, said the prospect of a capacity mechanism in Germany was preventing new investment in generation, as participants waited to see the shape of any new incentive. He said: “The energy price will always be the best incentive, even if that is in combination with a capacity market. What we don’t need is a subsidy mechanism for flexibility or new capacity only. We have less time to decide if our neighbours realize their own plans for capacity markets. A European solution should have priority, perhaps with a regional approach. The aim of any capacity market should be to provide capacity at the lowest price. If we pursue other objectives, efficiency will drop and we will create more layers of subsidy.”