The interface between support schemes for renewable energy and security of supply: Reviewing capacity mechanisms and support schemes for renewable energy in Europe

Abstract

Energy support schemes can either facilitate or restrict the sustainable development of the energy sector. This article reviews the interface and interaction between two types of energy support schemes – renewable energy support schemes and capacity mechanisms – in the European context. It first explains how state aid in the form of these two energy support schemes is regulated in the European Union and, second, shows how this regulation is reflected in national practices of the Member States by exploring the approaches to renewable energy in various capacity mechanisms. This interdisciplinary analysis of the trade-offs and synergies between renewable energy policies and energy security policies in Europe finds that the European experiences are diverse. The article demonstrates how states often operate a conflicting policy mix where renewable energy support facilitates decarbonization while, in many cases, capacity mechanisms simply back up the intermittency of renewable energy sources with fossil-fuel-based energy solutions that hinder the achievement of the energy transition. Facilitating a shift of focus in capacity mechanisms to low-carbon technologies, demand-response, and storage solutions is the first step in resolving the conflicting policy mix.