The Regulatory Assistance Project’s (RAP) and ClientEarth’s Concerns with UK Capacity Mechanism’s State Aid Conformity

The Regulatory Assistance Project (RAP) and ClientEarth challenge the UK government's (DECC) justification for a market-wide Capacity Mechanism, asserting that the analysis of generation adequacy is overly conservative and ignores the potential of demand response and interconnectors. They argue that a targeted strategic reserve would be a more cost-effective and less distortive alternative, especially given Ofgem's planned reforms to the Balancing Mechanism which would introduce stronger scarcity pricing signals.

• The analysis of the UK's generation adequacy problem is likely overly conservative due to pessimistic assumptions regarding plant availability, interconnector support, and demand response.
• National Grid's plant availability estimates are based on data since 2000, a period where generators lacked commercial incentives to maximize peak season availability, whereas other markets like PJM show significantly higher availability for CCGT plants (over 96% compared to the UK's 85% assumption).
• The UK's approach to interconnector support is irrational as it assumes zero contribution from continental Europe during winter peaks, ignoring market coupling and emergency support arrangements.
• The proposed Capacity Mechanism may foreclose low-cost demand response, potentially locking UK consumers into up to 4,000 MW of unnecessary new power plant investments because demand response is excluded from the initial 2014 auction.
• A targeted strategic reserve is presented as a more appropriate and cost-reflective alternative to a market-wide Capacity Mechanism, as the latter may permanently suppress price signals and transfer wealth from consumers to generators.
• Ofgem's planned reforms to the GB Balancing Mechanism, which will ensure cash-out prices reflect the marginal cost of balancing, may undermine the need for market-wide capacity payments by providing a powerful economic signal to procure adequate cover.

APA

ClientEarth (n.d.). The Regulatory Assistance Project’s (RAP) and ClientEarth’s Concerns with UK Capacity Mechanism’s State Aid Conformity. https://www.clientearth.org/media/ebbp1e2g/the-regulatory-assistance-projects-rap-and-clientearths-concerns-with-uk-capacity-mechanisms-state-aid-conformity-coll-en.pdf

Chicago

ClientEarth. The Regulatory Assistance Project’s (RAP) and ClientEarth’s Concerns with UK Capacity Mechanism’s State Aid Conformity. n.d. https://www.clientearth.org/media/ebbp1e2g/the-regulatory-assistance-projects-rap-and-clientearths-concerns-with-uk-capacity-mechanisms-state-aid-conformity-coll-en.pdf.

Wikipedia

{{cite press release |author=ClientEarth |title=The Regulatory Assistance Project’s (RAP) and ClientEarth’s Concerns with UK Capacity Mechanism’s State Aid Conformity |url=https://www.clientearth.org/media/ebbp1e2g/the-regulatory-assistance-projects-rap-and-clientearths-concerns-with-uk-capacity-mechanisms-state-aid-conformity-coll-en.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{clientearthndregulatory, author = {{ClientEarth}}, title = {{The Regulatory Assistance Project’s (RAP) and ClientEarth’s Concerns with UK Capacity Mechanism’s State Aid Conformity}}, publisher = {ClientEarth}, url = {https://www.clientearth.org/media/ebbp1e2g/the-regulatory-assistance-projects-rap-and-clientearths-concerns-with-uk-capacity-mechanisms-state-aid-conformity-coll-en.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }