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State aid to secure electricity supplies

Sector inquiry

Working Groups with Member States

Individual State aid cases


Related policy documents and initiatives

An increasing number of Member States are taking action to secure their electricity supplies and prevent potential black-outs by introducing capacity mechanisms.

Capacity mechanisms are measures taken by Member States to ensure that electricity supply can match demand in the medium and long term.

Capacity mechanisms are designed to support investment to fill the expected capacity gap and ensure security of supply. Typically, capacity mechanisms offer additional rewards to capacity providers, on top of income obtained by selling electricity on the market, in return for maintaining existing capacity or investing in new capacity needed to guarantee security of electricity supplies.

Capacity mechanisms have an impact on competition in the internal electricity market. Many of these mechanisms involve State aid, so they are subject to EU State aid rules. The European Commission has launched a sector inquiry, established a Working Group with Member States and started individual assessments of Member States' capacity mechanisms on the basis of the Guidelines on State aid for environmental protection and energy 2014-2020 ("EEAG")

European Commission opens in-depth investigation into German Capacity Reserve

The European Commission has opened an in-depth investigation to assess whether German plans to set up an electricity capacity reserve comply with EU state aid rules. The Commission has concerns that the measure may distort competition and favour power plant operators over demand response operators.

Commissioner Margrethe Vestager, in charge of competition policy, said: "Reliable electricity supplies are crucial to a functioning economy and Germany has a legitimate interest to ensure security of supply for its citizens and businesses. It is our role to ensure that companies are granted state support only when it is truly necessary and in a manner that limits distortions of competition. We currently have a number of concerns regarding the need and design of the German strategic reserve. This is why we will investigate further and invite third parties to submit their views on the measure."

Read the full press release here. The decision itself can be accessed here. A summary of the decision is expected to be published in the Official Journal of 19 May 2017. Interested parties are invited to submit comments on this decision until 19 June 2017, to:

European Commission
Directorate-General for Competition
Place Madou/Madouplein
1049 Brussels
Fax No: + 32 22961242

Your views will be communicated to Germany. Confidential treatment of the identity of the interested party submitting the comments may be requested in writing, stating the reasons for the request.

Sector inquiry

On 29 April 2015, the European Commission launched a State aid sector inquiry into national capacity mechanisms. The decision initiating the sector inquiry is available in three languages: en fr de

The inquiry aims at gathering information on capacity mechanisms to examine, in particular, whether they ensure sufficient electricity supply without distorting competition or trade in the EU Single Market. It complements the Commission's Energy Union Strategy to create a connected, integrated and secure energy market in Europe.

The European Commission on 13 April 2016 adopted its interim report consolidating the findings and tentative conclusions of the sector inquiry into capacity mechanisms.

The interim report is available here in all languages:
bg cs da de el en es et fi fr hr hu it lt lv mt nl pl pt ro sk sl sv

The Staff Working Document accompanying the interim report is available in en
The press release that accompanied the interim report is available in all languages here.

The interim report was open for public consultation between 13 April 2016 and 6 July 2016

The Commission adopted the final report on the results of the sector inquiry on 30 November 2016

The final report is available in: bg cs da de el en es et fi fr hr hu it lt lv mt nl pl pt ro sk sl sv

The Staff Working Document accompanying the final report is available in en

The press release that accompanied the final report is available in all languages here


Working Groups with Member States

The Guidelines on State aid for environmental protection and energy 2014-2020 (EEAG) contain for the first time rules to assess capacity mechanisms (Section 3.9 of the EEAG). As this is a relatively new field in State aid policy, the Commission has established a Working Group with Member States to help them implement the relevant provisions in the Guidelines and to share experience in the design of capacity mechanisms. The context of the discussions is reflected in thematic papers developed by the Commission (DG Competition). An overview of the different workshops can be found below, along with the papers and slides presented in each meeting.

First Working Group – 22 January 2015 Second Working Group – 14 April 2015 Third working Group - 30 June 2015 Fourth working Group - 15 June 2016
  • Discussion on the interim report of the sector inquiry
  • Discussion on cross border participation in capacity mechanisms

Individual State aid cases

The Guidelines on State aid for environmental protection and energy (EEAG) 2014-2020 adopted in July 2014 for the first time contain criteria for the Commission to apply when assessing capacity mechanisms.   A list of all cases adopted under the EEAG is given below:


28-09-2015: capacity mechanisms in Europe

With the support of DG Competition, King's College London and the College of Europe at Bruges organised on 29 September 2015 in Brussels the conference "Capacity mechanisms in Europe: The fundamental issues behind the ongoing sector inquiry". The conference provided a valuable input to the ongoing sector inquiry. For more details and the full programme click here .

The presentations are now available:

Keynote speech by Margrethe Vestager, European Commissioner for Competition: "Securing electricity supply in the EU: How to optimise public support"

Session 1 - Which market design is more appropriate for Europe: energy only market or a given form of capacity mechanism?

Chairman: Klaus-Dieter Borchardt, Director DG Energy, European Commission

Jamie Carstairs, Linnfall Consulting, Edinburgh
Carlos Batlle, Comillas Pontifical University IIT, Madrid
Mike Hogan, Senior Adviser, The Regulatory Assistance Project, London
Fabien Roques, Partner CompassLexecon, Paris

Session 2: If a capacity mechanism, which design is most appropriate?

Chairman: Massimo Merola, President GCLC

Rickard Nilsson, Project manager, Nord Pool Spot
Robin Cohen, CRA Vice-President, London
Thomas Veyrenc, RTE Director, Markets department, Paris
Dan Monzani, Head of Security of electricity supply team, DECC, London
Andrea Villa, Senior Analyst in Energy & Regulatory Affairs, Enel S.p.A, Rome

Related policy documents and initiatives

Related links
Speeches and articles - Energy - Electricity - Environment