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Highlights


Refine eligibility criteria for capacity schemes

Agree 700 kg CO2 on average per year per kW limit

Next step is to reach accord with EU parliament

Brussels — EU coal-fired power plants could benefit from capacity payments through 2030 if a negotiating position agreed by EU energy ministers on a draft EU electricity market design regulation makes it into the final binding version.

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The position, agreed at an EU energy council meeting in Brussels, would allow existing power plants with emissions either above 550 g carbon dioxide/kWh or 700 kg CO2 on average per year per installed kW to receive capacity payments through 2030.

These payments would have to start decreasing though after 2025.

New power plants with emissions above these limits -- i.e. all unabated coal plants -- would not be allowed to take part in capacity mechanisms from 2025.

These timings are around seven years later than the European Commission's original proposal from November 2016, which sought to exclude new plants above the 550g CO2/kWh emission limit from capacity mechanisms from around late 2018 and existing plants from around late 2023.

The commission's timings were linked to the entry into force of the regulation, which is likely to be around late 2018, subject to further approvals.



The 700 kg CO2 on average per year per installed kW limit is another new element, proposed by Italy, which is intended to allow low-use, higher-emission peaking plants needed for supply security to continue taking part in capacity mechanisms.

Italy pushed for a 700 kg limit over an initial proposal from France for a 350 kg limit, saying the lower limit would exclude gas plants needed for supply security. France relies mainly on nuclear power plants.

The capacity mechanism limits are particularly relevant for Poland, which still generates more than 80% of its power from coal plants, and is in the process of finalizing a capacity mechanism.

It plans a first capacity auction in December 2018, for capacity to be delivered five years later.

But even Poland has no plans to build new, unabated coal plants after 2025, according to its energy minister Krzysztof Tchorzewski, and Poland was happy with this negotiating position.

Poland may be the most reliant on coal, but Germany has the highest CO2 emissions from power emissions in Europe, a legacy of old, depreciated, coal plants benefiting from renewables keeping prices too low to make gas-fired plants profitable.

The next step is for the European Parliament to finalize its negotiation position so that it can open informal talks with the council on the final common text needed before the proposals can become binding.

The parliament's energy committee is due to vote on its recommendation in February, with a full plenary vote expected after that.

The informal talks could start in April, so an informal accord could be reached around mid-2018, and the regulation published in the EU's Official Journal before the end of 2018.

--Siobhan Hall, siobhan.hall@spglobal.com

--Edited by Jonathan Loades-Carter, jonathan.carter@spglobal.com