The Department of Energy and Climate Change (Decc) remains “confident” it can see of the legal challenge launched by Tempus Energy, which alleges that the capacity market is unlawful and in breach of EU State Aid regulations.
The start-up announced its challenge on 4 December, three weeks before the first capacity auction.
That auction procured 48.6GW of power capacity. Energy minister Matthew Hancock has hailed the auction a success, “with a good balance between supporting existing generation and new build” but faced criticism for buying much of that capacity from legacy fossil-fueled plant.
Other aspects of the programme, including the limited opportunities for interconnectors and demand-side response companies to secure contracts have been called into question.
Decc says it will review the auctions process this summer. Ofgem has begun consulting on revisions to the capacity market rules with demand-side response (DSR) one of the priority areas.
Hancock though told MPs last week that Decc was “very confident” of winning the case and that the “[European] Commission is very confident that it is lawful.” He added that he was “pleased to see some DSR successful in the auction” and that concerns voiced by the “DSR fraternity… will be part of the summer review.”
Of the 48.6GW of capacity procured in the T-4 auction, DSR firms represented 174MW, or around 0.35% of the total.