The development of the Capacity Market for electricity in Great Britain
EPG Working Paper: 1702
A Capacity Market (CM) for electricity was introduced in Great Britain in the early 2010s, with the first auctions being held in 2014. The CM has been controversial in its design and effects. In particular it has been seen as benefitting existing, often high-carbon, capacity and large incumbent generators, rather than new entrants and technologies, such as demand side response. More broadly, it is seen by some as working against, rather than for, the development of a low-carbon flexible future energy system. This paper traces the development of the Capacity Market as a policy process, with a particular focus on the influence of incumbents in that development. It is based on interviews with participants in and close observers of that process, and on a close reading of the policy process documentation, such as consultation submissions. The study of corporate influence in this case is complicated by the confluence of incumbent interests and political incentives facing government actors to keep the lights on. In the main decisions regarding the CM, including the decision to adopt a mechanism in the first place, and in deciding to have a market-wide approach, the incumbent lobby was split. However, in both these cases, the government’s decisions were in line with the wishes of, and used the arguments of the majority of incumbents. There is also evidence that incumbents lobbied effectively against a more supportive design of the CM for demand side response providers. The paper concludes with some reflections on what can be learned from this case about how to minimise the role of corporate influence in energy policy making.
incumbents, Capacity Market, governance, electricity, policy process, demand side
Date: 9 Oct 2017
Download Paper: WP 1702 Capacity Market