Industry & Business

European Commission Approves Joint Capacity Mechanism for Ireland and Northern Ireland

 Breaking News
  • Largest Ever European Investment Bank Support in Ireland The European Investment Bank is to provide a loan of €490 million to support construction of the new children’s hospital in Dublin. This represents the largest ever financial engagement by the European Union’s long-term lending institution in Ireland and the EIB’s first backing for a hospital in the country. The new children’s hospital project includes two [...]...
  • Strabane Manufacturer to Invest Over £7 Million in Ambitious Expansion Strabane-based Fabplus is planning to more than double its workforce and turnover with support from Invest Northern Ireland. The investment is part of a three year expansion plan to increase its market share in the Republic of Ireland and Great Britain, and gain a foothold in mainland Europe and Scandinavia. Recruitment is underway to employ 83 additional staff at [...]...
  • PM Group Appoints a New Non-Executive Director Michael McNicholas has been appointed as a Non-Executive Director of Project Management Holdings (PM Group), the Irish headquartered international project delivery specialists. Michael McNicholas. Michael has over 35 years’ experience in senior leadership positions in the public and private sectors. He is the former CEO of Ervia, NTR plc and Managing Director of ESB International.  During his [...]...
  • Center Parcs Signs Contract With John Sisk & Son As construction activity on the much anticipated €233 million Center Parcs Longford Forest resort in County Longford ramps up, the company has announced it has formally awarded two major construction contracts to Dublin-based construction firm John Sisk & Son. The contracts for the construction of the 470 lodges and 30 apartments as well as the state-of-the-art centre [...]...
  • Medi-Shower Invests in Innovation to Drive Export Growth Multi-award-winning manufacturer Medi-Shower has created ‘smart showerhead’ technology which can reduce the risk of Legionnaires disease. The cutting edge product, developed with R&D support from Invest Northern Ireland is designed to meet the high requirements for hygiene within the healthcare sector. It reduces the risk of waterborne infection from bacteria that can build up due to poor design [...]...

European Commission Approves Joint Capacity Mechanism for Ireland and Northern Ireland

European Commission Approves Joint Capacity Mechanism for Ireland and Northern Ireland
December 04
09:21 2017

The European Commission has approved under EU State aid rules the new capacity mechanism for the jointly operated Irish and Northern Irish electricity market. The mechanism will help ensure security of electricity supply whilst preserving competition in the Single Market.

Commissioner Margrethe Vestager, in charge of competition policy, said: “The joint Irish and Northern Irish capacity mechanism will help ensure security of electricity supply in the years to come. I think it is a good thing that this mechanism is operated across national borders and fosters competition among all potential capacity providers, to the benefit of consumers.”

Under the capacity mechanism, power plants and other capacity providers in the ‘all-island market’ will obtain a payment for being available to generate electricity or, in the case of demand response operators, for being ready to reduce their electricity consumption to help balance demand with supply. It helps to ensure that there is sufficient capacity to meet electricity demand at all times in Ireland and Northern Ireland.

The capacity providers will be selected on the basis of regular, competitive auctions. The first auction is scheduled to take place in December 2017.

The Commission assessed the measure under the 2014 Guidelines on State aid for environmental protection and energy. As required by the Guidelines, Ireland and Northern Ireland have demonstrated the measure’s necessity for ensuring the security of supply objective, based on a thorough market analysis. The Commission concluded that the capacity mechanism complies with EU State aid rules, in particular because it is open to all potential types of capacity providers, including demand response. Furthermore, the measure will keep costs for consumers in check thanks to the regular, competitive auctions to allocate capacity contracts.

The joint Irish and Northern Irish capacity mechanism also has a special feature to ensure its effectiveness: when electricity prices reach very high levels (i.e. more than €500 per MWh), it triggers an obligation for power plants selected in the auctions to pay back some of the State aid. They can finance this payback obligation from revenues they generate from the sale of electricity. The capacity mechanism therefore not only ensures that capacity is available, it also gives power plants an incentive to use this capacity to offer their electricity on the market when there is scarcity.


The joint Irish and Northern Irish capacity mechanism forms part of a set of market reforms referred to as the Integrated-Single Electricity Market (‘I-SEM’). It is set to start in May 2018.

The Commission has recently assessed other measures aimed at ensuring security of electricity supply in various Member States. It approved market-wide capacity mechanisms in Great Britain in July 2014 and in France in November 2016. Moreover, the Commission carried out a State aid sector inquiry into capacity mechanisms in 11 Member States. It concluded that capacity mechanisms can be an appropriate tool to ensure the security of electricity supply if well-designed and targeted to the underlying market failures.

The non-confidential version of the decision will be published in the State aid register on the competition website under the case numbers SA.44464 and SA.44465 once eventual confidentiality issues have been resolved. The State Aid Weekly e-News lists new publications of state aid decisions on the internet and in the EU Official Journal.

About Author



Related Articles

New Subscriber

Subscribe Here


National Manufacturing Conference & Exhibition 2016

NIBRT Springboard Success Stories

Upcoming Events

  • No upcoming events
AEC v1.0.4