EU opens investigation into scheme designed to keep British lights on

European authorities will now investigate a British system designed to prevent energy blackouts, months after an EU court suspended the scheme.

The so-called capacity market started last year, as the government tried to incentivise producers to meet peak demand.

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The system was intended to ensure backup generators can kick in when demand outstrips supply, especially on days when there is little wind. The government sets the amount of supply which is sold at auction.

It was challenged by Tempus Energy, a company which helps households cut their use during peak hours.

Tempus claimed that, among other things, the policy favoured new fossil fuel power plants by giving them 15-year contracts, while use-limiting businesses were only given contracts for one year at a time.

Meanwhile, existing power plants can get a one-year contract, or a three-year deal if they made upgrades.

The European General Court found that the EU Commission had not properly investigated Tempus’ concerns when it approved the scheme in 2014. It said the Commission must go back to the drawing board, and suspended the capacity market.

The Commission is pushing ahead with the review despite appealing the decision.

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The Commission said the investigation “will focus, in particular, on the participation of energy consumers offering to reduce their electricity consumption in times of supply disequilibrium in the electricity market.”

Tempus chief executive Sara Belltold City PM: “Tempus is confident that this investigation will conclude polluting peaking plants are illegally favoured and we must restructure to allow for cleaner technologies to compete fairly.”