Roques: Capacity markets can co-create the new European energy market (INTERVIEW)

Fabien Roques, Consultant with Compass lexecon and Associate Professor with University Paris Dauphine agreed to answer a couple of questions on capacity market mechanisms.

BiznesAlert.pl: Poland, France, Great Britain, Italy, Greece and Hungary have worked out a common statement on capacity market mechanisms. Why is it important for each country to develop its own mechanisms?

Fabien Roques: Security of supply has come back to the top of the list of energy policy priorities in recent years as plant decommissioning in a number of European countries and the significant investments needed to maintain security of supply have raised question on the need to reform the current electricity markets. A number of countries have chosen to implement a capacity mechanism, with different approaches. There is no ‘one size fits all’ design for capacity mechanisms as they need to be designed to fit with the local specificities of the power system and market.

Can the capacity market finance the energy transformation in Poland?

The Polish capacity market is primarily aimed at ensuring adequate incentives and remuneration for resources which contribute to the security of the electricity system.

Can the capacity mechanisms be a useful part of new architecture of European energy market?

In the context of the transition to a decarbonised electricity system, the growth of low variable cost and variable renewable generation raises the fundamental question of the evolution of the design of electricity markets. I believe that well designed capacity mechanisms can be a structural part of a new architecture for European electricity markets, contrary to some that consider them as temporary solutions.