UK's backup power subsidies are illegal, European court rules

(The Guardian, 15 Nov 2018) Surprise judgment means government must halt capacity market scheme.

The UK’s scheme for ensuring power supplies during the winter months has been suspended after a ruling by the European court of justice that it constitutes illegal state aid.

Payments to energy firms under the £1bn capacity market scheme will be halted until the government can win permission from the European commission to restart it.

The scheme subsidises owners of coal, gas and other power stations so the plants are ready to ensure that electricity for businesses and homes is available at peak times in winter.

The UK has also been blocked from holding any capacity market auctions for energy firms to bid for new contracts to supply backup power in the future. National Grid said ministers had instructed it to indefinitely postpone auctions that had been planned for early 2019.

The government said it was disappointed by the judgment but insisted that power supplies were not at risk.

On Thursday, the ECJ ruled that the European commission had failed to launch a proper investigation into the UK’s capacity market when it cleared the scheme for state aid approval in 2014.

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The Guardian, 15 Nov 2018: UK's backup power subsidies are illegal, European court rules