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Joint Irish and Northern Irish capacity mechanism wins state aid approval

The joint Irish and Northern Irish capacity mechanism has moved one step closer this afternoon by clinching EU state aid approval.

The European Commission today rubber stamped the prospective mechanism, designed to allow the two countries to procure back-up generation capacity in much the same way the UK’s capacity market does.

The mechanism forms part of wider reforms under the Integrated-Single Electricity Market and will now start in May next year, with the first auctions set to take place next month.

Commissioner Margrethe Vestager said that the initiative would help ensure security of supply in the years to come.

“I think it is a good thing that this mechanism is operated across national borders and fosters competition among all potential capacity providers, to the benefit of consumers,” she said.

The Irish and Northern Irish equivalent also includes an effectiveness feature that forces contracted power plants to pay back portions of the state aid when electricity prices reach high levels, paid through revenues generated from the sale of electricity, incentivising generators to offer their power when demand outstrips supply.