Prioritising energy efficiency and demand side measures over capacity mechanisms under EU energy law

Abstract

Energy efficiency has been given high strategic priority in European Union energy law. In addition to energy efficiency, reducing or shifting demand have been identified as key elements not only for improving the functioning of the internal electricity market but also for achieving the EU sustainability objectives and ensuring security of supply. This article argues that the EU regulatory framework for ensuring generation adequacy and introducing capacity mechanisms should be interpreted to prioritise demand side measures over capacity mechanisms. Through this contextual interpretation of the relevant regulatory framework, this article aims to identify the ways in which the Commission uses demand side assessments as justification for declaring capacity mechanisms (in)compatible with the internal market and how energy efficiency and demand side measures can, in practice, be designed to complement capacity remuneration for supply side measures.