Capacity Remuneration Mechanisms - Implementations in Europe and Implications for the European Internal Energy Market

摘要

Capacity Remuneration Mechanisms (CRMs) are implemented in European countries to help to achieve national generation adequacy targets. In contradiction to the European harmonization process towards the Internal Energy Market (IEM) national CRMs may introduce distortion and implicit competition of market designs. By remunerating capacity, CRMs introduce additional revenue streams based on availability (in {EUR}/MW). The objective to reach a European-wide economically efficient generation mix might not be reached due to differing investment signals originating from different market designs. The harmonization process of short-term energy markets based on energy output, remunerated in {EUR}/MWh, makes use of interconnection capacity to exchange energy between market areas. This causes prices to converge prices if interconnection capacity is sufficient. Consequently, there is an interaction between implemented market designs, with or without CRMs, and the need for interconnection capacity. While for harmonized short-term energy-based markets the use of interconnection lines is common, cross-border participation and the usage of interconnection lines for CRMs is mostly unexploited. Two recent examples of national CRMs are the Strategic Reserves built up in Belgium starting from the winter 2014/2015 and the Capacity Market held for the first time in November 2014 in the United Kingdom. In the first stage both mechanisms only aim at capacity located within the national borders. With respect to the exploitation of cross-border capacity both implementation only consider the availability of interconnected capacity in the determination of the demanded volume of capacity, i.e. the expected contribution of interconnection capacity in time of system stress is taken into account. However, the value of the contribution of interconnected capacity to the national generation capacity can only be assessed if market-based cross-border participation is implemented.