Clean Security of Supply in Europe: Models for Market-Aligned Contracting and Procurement

The report argues that European security of supply planning and clean procurement policies have been uncoordinated, often resulting in capacity mechanisms that favor fossil fuels and contracts that distort short-term market signals. It proposes a shift toward 'market-aligned' contracting—such as index REC structures—and co-optimized multi-product markets that separately value energy, capacity, and clean attributes to attract clean investment without sacrificing operational efficiency.

• Current security of supply planning and clean procurement policies in Europe are largely uncoordinated, leading to inefficiencies and a tendency for capacity mechanisms to favor fossil fuels because they prioritize the least cost for reliability over clean energy goals.
• Highly decarbonized power systems face new operational challenges, including greater short-term energy price extremes, increased volatility, and reduced system inertia due to the rise of inverter-based resources over traditional generator droop response.
• Traditional fixed-price Contracts for Differences (CfDs) can weaken short-term market signals, whereas 'index REC' contracts maintain these signals by incentivizing sellers to optimize output for high-value hours and avoid production during negative price intervals.
• Effective capacity mechanisms require precise 'derating factors' to translate installed capacity into reliable delivery; these factors should be technology-neutral and adaptable to changing weather-driven and correlated outages.
• Mexico's long-term auction scheme (2015-2017) demonstrated the efficiency of co-optimizing unbundled products—energy, capacity, and Clean Energy Certificates (CELs)—which resulted in world-record low prices for new clean supply.

APA

Thompson, D. A. W., & Spees, D. K. (2026). Clean Security of Supply in Europe: Models for Market-Aligned Contracting and Procurement. Clean Air Task Force. https://www.catf.us/wp-content/uploads/2026/02/clean-security-supply-europe.pdf

Chicago

Thompson, Dr. Andrew W., and Dr. Kathleen Spees. Clean Security of Supply in Europe: Models for Market-Aligned Contracting and Procurement. Clean Air Task Force, 2026. https://www.catf.us/wp-content/uploads/2026/02/clean-security-supply-europe.pdf.

Wikipedia

{{cite report |last1=Thompson |first1=Dr. Andrew W. |last2=Spees |first2=Dr. Kathleen |title=Clean Security of Supply in Europe: Models for Market-Aligned Contracting and Procurement |publisher=Clean Air Task Force |date=February 2026 |url=https://www.catf.us/wp-content/uploads/2026/02/clean-security-supply-europe.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{thompson2026clean, author = {Thompson, Dr. Andrew W. and Spees, Dr. Kathleen}, title = {{Clean Security of Supply in Europe: Models for Market-Aligned Contracting and Procurement}}, institution = {Clean Air Task Force}, year = {2026}, month = feb, url = {https://www.catf.us/wp-content/uploads/2026/02/clean-security-supply-europe.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }