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Issue 917 | Capacity Market Five-year Review and Carbon Dioxide Limits Consultation

Issue 917 | Capacity Market Five-year Review and Carbon Dioxide Limits Consultation

Steven Britton Steven Britton Senior Analyst

BEIS report and consultation: Capacity Market Five-year Review and Carbon Dioxide Limits Consultation Electricity Alert 7 August 2019 Steven Britton   Headline Assessment   1 Assessment & recommendation BEIS published two significant documents relating to the Capacity Market (CM) on 22 July: the conclusion of its five-year review of the policy; and a consultation on the implementation of new limits on CO2 emissions. The five-year review was launched in August 2018 and sought to determine: if the CM will still be needed in the future; to what extent the CM has achieved its objectives; if these objectives remain appropriate; and if these objectives could be achieved in the future in a way that imposes less regulation. BEIS has concluded that that the scheme and its objectives remain fit for purpose but plans to do further work on a variety of areas. This includes a consultation later in the year – after State Aid approval has been re-obtained for the CM – which will look at: Reviewing issues relating to demand-side response (DSR), including the length of Capacity Agreements – on which its preference is to continue to limit them to one year – and delivery assurance Reducing the 2MW minimum capacity threshold to help difficult-to-aggregate technologies compete Strengthening the penalty regime Examining de-rating for all technologies The same day, BEIS also launched a consultation on how it should implement new CO2 emissions limits that will take effect from 1 July 2025. Derived from EU legislation, these state that from 1 July 2025 CM Units that became operational after 4 July 2019 ...

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