19.4.2022
EN
Official Journal of the European Union
L 117/59
(108) Further, as part of the pre-qualification process, the candidates have to deliver a provisional financial security in order to be allowed to participate in the auction.
This provisional financial security becomes effective when the CMU is selected in the auction.
If the capacity provider, after selection in the auction, does not respect its contractual obligations or in case he is not willing to sign the capacity contract, financial penalties will be applied as part of the pre-delivery control process.
The contractual counterparty has the right to claim financial security in case these penalties would remain unpaid.
At the moment of prequalification, the amount of the provisional financial security will be 20 000 EUR/MW for virtual and additional CMUs and 10 000 EUR/MW for existing CMUs, in function of the CMU’s eligible volume (given that the contracted capacity is not known yet and ensuring that the financial security is proportional to the size of the project and the consequent risk to system in case of not delivering).
If the final contracted capacity of the CMU is lower than its eligible volume, the amount of the financial security is lowered for the positive difference between the eligible volume and the contracted capacity, multiplied by EUR 20 000 (for virtual and additional CMUs) or EUR 10 000 EUR (for existing CMUs).
(109) In addition, parties wishing to apply for pre-qualification for new installations (for a 15-year capacity contract) fired with fossil fuels must recognise that obtaining a capacity contract does not exempt them from current and future legislation and objectives established by the European Union and/or Belgium to reduce greenhouse gas emissions.
In addition, they must acknowledge that obtaining a capacity contract commits them to contribute to policy preparation to achieve these objectives.
To this end, they need to attach a written declaration in which they undertake to: (a) study the technical and economic feasibility of reducing greenhouse gas emissions, in accordance with relevant European and Belgian legislation and targets, of the installation concerned by 31 December 2026; (b) establish, by 31 December 2027, an emission reduction plan indicating how they will contribute to the transition to climate neutrality in 2050, with interim targets for the years 2035 and 2045; and (c) achieve zero or negative emissions by 2050.
The parties involved in the establishment of an emission reduction plan may decide to carry out this study jointly.
(110) Compliance with the commitments set out in recital (109) must be demonstrated to the Directorate-General for Energy of the FPS Economy.
2.5.4.
Specific auction design features
2.5.4.1.
P r i c i n g r u l e
(111) The competitive auction mechanism makes use of the sealed bid auction format where bidders anonymously submit bids and the market is subsequently cleared in one single round.
According to the Belgian authorities, by not providing information to the market during market clearing and not allowing bidders to update their bids, the sealed bid auction format limits the potential for market power abuse.
They also indicate that with the sealed bid process, unlike in descending clock auctions, bidders are not tied up for (typically) 2-3 days in which they have to be available to react on the information that is made available for the auction process.
The less complex and timeconsuming auction process could further lower the entry barrier, especially relevant for new and small players and for demand side response parties whose core business is not the energy market.
(112) All successful bidders will be awarded a capacity remuneration, based on the pay-as-bid pricing rule for all auctions related to at least the initial two delivery periods (Y-4 and Y-1 auctions for delivery periods starting in November 2025 and November 2026).
In other words, successful capacity providers will receive their bidding price as capacity remuneration.
(113) Following the presentation to the Parliament of an evaluation report, the pay-as-cleared pricing rule could apply for auctions related to subsequent delivery periods.
Under the pay-as-cleared rule, the capacity remuneration equals the bid price of the most expensive bid selected (with the limitation of the intermediate price cap, see section 2.5.4.2).