The European Commission has reinstated state aid approval to the UK capacity market following an in-depth investigation.
The Commission said it was unable to find “any evidence that the scheme would put demand response operators or any other capacity providers at a disadvantage with respect to their participation in the scheme”.
The scheme is “necessary to guarantee the security of electricity supply, is in line with EU energy policy objectives, and does not distort competition in the single market,” it added.
The mechanism was suspended in November 2018 following a successful legal challenge by demand-side response provider Tempus Energy.
The General Court of the European Union ruling last year deemed state aid clearance for the scheme in 2014 was illegal.
In February, the Commission opened an in-depth investigation to reassess the compatibility of the scheme with EU state aid rules.
Today’s ruling will allow UK energy department BEIS to reinstate capacity market auctions.
BEIS said in May that renewables will be able to participate in future auctions for the first time, provided they do not receive other subsidy.