CO2 limits amendments to Capacity Market

Importantly, the regulation has introduced new requirements for capacity mechanisms regarding CO2 emissions limits.

The new requirements

Any generation capacity that started commercial production from 4 July 2019 that emits more than 550g of CO2 emissions per kWh will not be eligible to receive payments or commitments for future payments under a capacity mechanism.

In addition, from 1 July 2025, generation capacity will be ineligible for payments and commitments for future payments under capacity mechanisms if it;

  • began commercial production before 4 July 2019 and emits;
  • more than 550g of CO2 emissions per kWh and
  • more than 350kg CO2 of fossil fuel origin on average per year per installed kWe.

Member States of the EU will be required to adapt their capacity mechanisms to comply with the new rules by 31 December 2019.

What will be affected?

The emissions limits are expected to affect coal, diesel and potentially older inefficient gas generation. The changes will also prevent existing diesel and other generating components that do not meet emissions limits from being utilised as part of a DSR (Demand Side Response) CMU (Capacity Market Unit).

The Government will be consulting on the following points:

  • Whether emissions limits for existing generation should take effect on 1 July 2025, or 1 October 2024.
  • What length of agreements should be awarded in the upcoming T-3 and T-4 auctions to refurbishing fossil fuel generation that will not meet the emissions limits.
  • How best to deal with false or inaccurate Fossil Fuel Emissions Declarations and the recovery of capacity payments in such cases.

The consultation will run from 22 July 2019 until 6 September 2019.

Ongoing Capacity Market issues

The Capacity Market continues to be under suspension, following the ruling from the European Court of Justice in November 2018. The investigation by the European Commission is expected to conclude by the end of the year. Until a final decision is reached, National Grid are running the scheme as normal, short of making payments, to ensure that capacity providers may be eligible for deferred payments after the standstill period.

In the short-term the Capacity Market charge will still be levied on customer’s bills, currently accounting for 0.3p/kWh, approximately 2.5% of a bill. This means that consumers will likely see little immediate change.

Stay informed with EIC Insights

Our Market Intelligence team keep a close eye on the energy markets and industry updates. For the most-timely updates you can find us on Twitter and LinkedIn. Follow us today.

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Future Energy Scenarios

Future Energy Scenarios

The National Grid ESO (Electricity System Operator) has published its yearly Future Energy Scenarios (FES) report detailing four separate pathways that cover the future of energy to 2050 and beyond.

The ESO has taken onboard changes in policy, combined with technological progress and market forces, to create a range of credible scenarios. The scenarios have been modelled to reflect varying levels of decentralisation and the speed of decarbonisation.

The Pathways

Community Renewables (CE) – In this scenario there is a large focus on local energy schemes, boosting individual consumer engagement. Improved energy efficiency is a priority. Strong policy support promotes innovation and the transition towards renewables.

Consumer Evolution (CR) – This scenario sees a shift towards local generation and increased consumer engagement, like Community Renewables. However, a lack of strong policy direction means that progress is slow.

Two Degrees (TD) – Large-scale solutions are developed and consumers are provided with alternative heat and transport options. Priorities include increasing renewable capacity, improving energy efficiency and accelerating new technologies.

Steady Progression (SP) – This scenario evaluates the pace of the low-carbon transition at a rate comparable to today, slowing towards 2050.

Work on the FES 2019 document predates the UK government’s target for Net Zero emissions by 2050. Therefore, the scenarios follow the original Climate Change Act 2008 target of an 80% reduction in greenhouse emissions by 2050, compared to 1990 levels.

Of the scenarios, Community Renewables and Two Degrees meet the 80% target with common themes of strong policy support and high consumer engagement. One of the main drivers in reducing the UK’s carbon emissions to date has been environmental legislation.

Is Net Zero likely?

The ESO included a Net Zero spotlight in the FES 2019 publication to reflect the recent Net Zero publication by the Committee on Climate Change (CCC).

Analysis in the FES 2019 report aligns with the Net Zero publication by the CCC. This states that reaching Net Zero carbon emissions by 2050 is achievable, but only through immediate action across all key technology and policy areas.

In this scenario, the ESO highlight that electrification of the industrial and commercial sectors is vital in reducing emissions. Carbon capture, usage and storage (CCUS) technologies also have an essential role to play.

At the 2019 Future Energy Scenarios Conference the new target was acknowledged and will likely be taken into account for the pathways modelling in FES 2020.

Stay informed with EIC Insights

Our Market Intelligence team keep a close eye on the energy markets and industry updates. For the most-timely updates you can find us on Twitter and LinkedIn. Follow us today.

Visit our web page to find out more about EIC Market Intelligence and how we keep our clients informed at a frequency to suit them.

Long-Term Forecast Report

Our team of specialists work hard identifying trends, examining historical figures and forecasting for the future. Their expertise has enabled us to produce the Long-Term Forecast Report. A valuable tool which illustrates the annual projected increases to your energy bills and calculates your energy spend  allowing you to confidently forward budget and avoid any nasty surprises.

Cabinet Reshuffle sees new Business & Environment appointments

Business Secretary

Andrea Leadsom has been given the role of Business Secretary, replacing Greg Clark and will now be responsible for the UK’s decarbonisation strategy. Leadsom has previously had the roles of both the Energy Minister and Environment Secretary.

In the early stages of the leadership election for the Conservative Party she said that if she became Prime Minister she would declare a “climate emergency”. She also pledged to set up a Cabinet sub-committee tasked with overseeing net zero plans for 2050.

Environment Secretary

Theresa Villiers will be filling the role of Environment Secretary and has shown support to climate action, endorsing certain environmental policies and low-carbon initiatives.

Villiers is replacing Michael Gove who was responsible for leading the delivery of Defra’s (Department for Environment, Food and Rural Affairs) 25-Year Environment Plan. Gove has also been a key figure in the Government’s plan to eliminate avoidable plastic waste.

COP26 President

Another move saw Claire Perry give up her role as Energy and Clean Growth Minister at BEIS (Department for Business, Energy and Industrial Strategy) in order to serve as the COP26 President.

The 26th Conference of Parties (COP) will be an important event for climate action. The consensus reached at the Paris Agreement in 2015 is expected to come into full effect at the event, adding pressure to countries to improve their national climate action plans ahead of the event.

COP26 will be co-hosted by the UK, with Italy organising the pre-COP event. The event itself is expected to take place from 9-19 November 2020.

An oarsome charity day for EIC at Race the Dragon

The charity regatta takes place in Worcester and requires crews to race 200m upstream against other teams. EIC’s team, “E. I at C” took part for the first time, alongside 25 other crews.

The heats!

The competition started with two time trial races in order to seed the competitors into two categories, the plate and the cup.

The 14 strong crew of E. I at C lined up for their first preliminary race against Pitmaston Paddlers and Severn Nation Army. After a rocky start, the crew paddled hard to place second with a time of 1 minutes 13 seconds.

In the second preliminary round the crew raced against Oars of Spontex which was a mighty battle with the team losing by 0.6 of a second. The E.I at C time was a fantastic 1 minute 9 seconds – 4 seconds faster than their first race!


Next came a tense wait to find out where the crew had seeded.  Shock and disbelief followed as the team were told they were in the top 15 and now in contention for the cup.

In the final two races, E. I at C took on more crews but despite their determination failed to better their times, finishing the course at an average of 1 minute 15 seconds.


The Worcester Dragons rallied their members to confirm the final scoring and the presentation began. The EIC crew were thrilled to be presented with a cup and placed 15th in the competition.

Thanks to the Worcester Dragon Boat Racing Club for hosting such a fabulous event and to all the crews competing. A special thank you for the EIC colleagues racing as E I at C, for taking part.

Charity fundraiser

The EIC crew were raising awareness and funds for their chosen charity of the quarter, St Richard’s Hospice. Based in Worcester, the hospice cares for adults with a serious progressive illness, improving their quality of life from diagnosis, during treatment and to their last days. The hospice also provides incredible support to their loved ones. EIC chose this charity after it was nominated by a colleague who experienced the care and support first hand.

If you would like to donate to this wonderful charity, you can do so here.