Capacity remuneration mechanisms on European electricity markets—legal basis and actual implementation status

In recent years a range of different capacity remuneration mechanisms have been discussed and implemented on European electricity markets. This article gives an overview of different designs, classifying and exploring central and decentral capacity markets, strategic reserves and different capacity payments. To illustrate the particular designs, examples in Germany, Italy, France and Switzerland are discussed in detail. Given that all capacity remuneration mechanisms in the European Union (EU) are subject to EU state aid and electricity regulations, the article examines the legal framework of capacity remuneration mechanisms.