A landmark European court bid to re-open the UK’s capacity market is unlikely to be determined until October because the judges will be on holiday, a senior government official has revealed.
David Buttery, deputy director of energy security at the Department for Business, Energy and Industrial Strategy (BEIS) told a conference last Thursday (9 May) that capacity providers may have to wait until after the summer to learn the verdict on the European Commission’s appeal against the European Court of Justice’s (ECJ) decision to block the UK scheme.
The ECJ overturned the commission’s decision to authorise the UK’s scheme under the EU’s state aid rules.
Following the ECJ’s verdict, BEIS has suspended payments to capacity providers.
Buttery told the Westminster forum conference on energy security that the appeal will either be heard in July or October because the court is on holiday during August and September.
He said: “It’s most likely to be in October because there are a large number of interested parties whose legal teams may want to appear and I imagine it will be difficult to do in July.”
He also said that the department is hopeful that the commission would also announce the results of its fresh state aid investigation into the UK’s capacity market in October.
Buttery said the UK government had received a “positive view” that a decision is “possible” but not guaranteed in October.
“We hope it will do it before October because that is best for us and the market before the winter,” he said, adding that BEIS will be submitting its response to the state aid investigation next month.
Buttery also said that the government expects a statutory instrument to be in place that will clear the way for holding the next T-3 capacity market auction.
“Lots of banks have shut off the taps which particularly affects new projects.
“We’re not aware of companies that have gone bust but we recognise that companies across the energy market are in real financial hardship as a result of the annulment and we are trying to get those payments restored as quickly as possible.”
But he said that it was difficult to offer additional support to new build projects because of the risk of offering new build projects a competitive advantage over existing ones.
“We’re trying to keep things as normal as possible given abnormal circumstances. We are operating in an imperfect world and trying to get back to normal as soon as possible.”
And Buttery warned the hiatus in the capacity market scheme posed a risk to the UK’s future energy security.
“New build projects will be particularly affected. We might not see problems now but there are potential issues going forward.”
He said that the capacity market review would be taken over by the UK’s Competition and Markets Authority if the investigation is not completed by the end of October and the UK leaves the EU without a withdrawal deal.