Britain’s ability to keep the lights on has just been thrown into doubt by the European Court of Justice. It has ruled that the backbone of the UK’s capacity market energy scheme, which pays power stations to generate electricity, is illegal state aid and must be suspended. To call this a body blow for energy security is a gross understatement; as you read these words Whitehall is desperately trying to reassure generators and very nervous investors.
Payments to power stations through the capacity market have now been stopped until the Government can get permission from the European Commission to restart them, but this could take years. In the scheme, energy companies bid years in advance for billpayer funded subsidies to provide backup power from gas, coal and other power stations at crunch times during the winter.