Capacity payments: The final ingredient to supercharge coal

The document warns that without a 550gCO2/kWh limit on capacity payments, Europe's 256 operational coal plants could be 'supercharged', potentially extending their design life from 40 to 60 years. It identifies multiple EU policy gaps—including low carbon prices, biomass co-firing, and mining cross-subsidies—that already favour coal. The author contends that poorly designed capacity markets risk crowding out flexible, low-carbon alternatives like batteries and demand-side response, arguing that clean capacity is already cheaper than extending old coal plants.

• The proposed "550" legislation, which sets a 550gCO2/kWh limit, is intended to prevent high carbon intensity power plants from receiving capacity payments. This is critical because all 256 operational coal plants in Europe exceed this carbon intensity threshold.
• Failure to implement the 550gCO2/kWh limit could lead to a scenario where capacity payments extend the design life of coal plants from 40 years to 60 years, allowing them to remain operational into the 2040s.
• Several EU policy gaps currently advantage coal, including the lack of an explicit EU policy to prevent fossil fuel subsidies, the use of biomass co-firing to cross-subsidise coal, and mining cross-subsidies in Poland and Spain.
• Capacity market designs often favour large generators and risk blocking out flexible technologies such as batteries, demand-side response (DSR), and small peaking gas plants through restrictive availability durations or aggregation rules.
• Clean, modern capacity is more cost-effective than extending old coal plants, as evidenced by the February 2018 UK auction where two coal plants were replaced by interconnectors, batteries (364MW), and small peaking gas plants (328MW) at a clearing price of approximately €9/KW.

APA

Jones, D. (2018). Capacity payments: The final ingredient to supercharge coal. Ember. https://ember-energy.org/app/uploads/2020/03/Capacity-Payments-The-final-ingredient-to-supercharge-coal-2018.pdf

Chicago

Jones, Dave. Capacity payments: The final ingredient to supercharge coal. Ember, 2018. https://ember-energy.org/app/uploads/2020/03/Capacity-Payments-The-final-ingredient-to-supercharge-coal-2018.pdf.

Wikipedia

{{cite report |last1=Jones |first1=Dave |title=Capacity payments: The final ingredient to supercharge coal |publisher=Ember |date=19 February 2018 |url=https://ember-energy.org/app/uploads/2020/03/Capacity-Payments-The-final-ingredient-to-supercharge-coal-2018.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{jones2018capacity, author = {Jones, Dave}, title = {{Capacity payments: The final ingredient to supercharge coal}}, institution = {Ember}, year = {2018}, month = feb, url = {https://ember-energy.org/app/uploads/2020/03/Capacity-Payments-The-final-ingredient-to-supercharge-coal-2018.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }