Commission approves EUR 750 million Estonian capacity mechanism to ensure security of electricity supply
The European Commission has approved a EUR 750 million Estonian capacity mechanism in the form of a strategic reserve to ensure security of electricity supply during emergency situations, particularly when renewable generation is low and demand is high in Estonia.
The measure, applicable until 2035, remunerates generation, storage, and demand-response capacities held outside the electricity market and activated only when needed. Participation is open to all technologies that meet the CO₂ emission limits set in the EU Electricity Regulation.[MS1] Beneficiaries will be selected through a transparent, non-discriminatory tender based on the aid requested per MW of available capacity, with additional safeguards for undertakings with market power.
Assessed under Article 107(3)(c) TFEU and the CEEAG, the Commission found that the measure is necessary and appropriate to address Estonia’s specific security of supply challenges arising from periods of low renewable generation and high consumption. The aid is proportionate and limited to the minimum required through competitive bidding and verification mechanisms that prevent overcompensation.
The Commission concluded that the positive contribution of the measure to electricity security outweighs any potential distortions of competition and trade, and that it complies with the relevant provisions of the Electricity Regulation.
The non-confidential version of the decision will be published under case number SA.112459. For more information, see the Commission’s PR.