Capacity remuneration mechanisms (or simply capacity mechanisms) have become a fact of life in member states' energy markets and are one of the hottest topics in the wider European regulatory debate. Concerned about the security of electricity supply, national governments are implementing subsidy schemes to encourage investment in conventional power generation capacity, alongside already heavily subsidized renewable energy sources. With the increasingly connected European electricity markets, the introduction of a capacity mechanism in one country not only tends to distort its national market but may also have unforeseeable consequences for neighbouring electricity markets. As these mechanisms are adopted by member states with limited supra-national coordination as well as consideration for the cross-border impact, they tend to cause serious market distortions and put the future of the European internal electricity market at risk.

This second edition will take stock of how capacity mechanisms have actually worked so far and consider the consequences they have for the European internal electricity market. It will include a detailed overview of national capacity mechanisms, their implications for the EU internal market, and will outline the nature of market failures which are likely to occur in the European electricity markets. This edition is intended to serve as a point of reference for regulators and policy-makers on how to design optimal capacity mechanisms in Europe. It will be an invaluable resource for anyone interested in energy market design, regulation, and competition issues.

About the Author:
Leigh Hancher, Professor of Energy Law and Policy at the Florence School of Regulation, Florence, and Professor of European Law at Tilburg University, the Netherlands, , Adrien de Hauteclocque, Head of Cabinet of the President of the General Court of the EU and Principal Adviser, Florence School of Regulation, , Kaisa Huhta, Senior Researcher and an Academy of Finland Postdoctoral Fellow at the UEF Law School and at the Centre for Climate Change, Energy, and Environmental Law, , Malgorzata Sadowska, Policy Officer, EU Agency for the Cooperation of Energy Regulators (ACER),

Leigh Hancher holds several chairs at European universities. She began her academic career as a lecturer in law Warwick University in 1984, obtained her PhD at the University of Leiden in 1986, and was appointed Professor of Economic Law at the Erasmus University Rotterdam in 1990. She has worked in private practice since 1990 and is currently Special Counsel to Baker Botts PLC. She has published widely on both EU state aid law and EU energy law over the last 4 decades.

Adrien de Hauteclocque is the Head of Cabinet of the President of the General Court of the European Union and a Principal Adviser of the Florence School of Regulation (European University Institute). His research interests include EU competition and state aid law, competition policy in network industries, and the law & economics of energy regulation. Before moving to the EU institutions, he pursued his academic career at the University of Manchester and at the European University Institute where he co-founded the "EU Energy Law & Policy" Area of the Florence School of Regulation. He is a regular speaker at international conferences and also holds regular teaching commitments for the Legal Task Force of the Council of European Energy Regulators (Belgium), École Nationale d'Administration (France), and at HEC Paris (France). He obtained his PhD in Law from the University of Manchester and holds a MSc in Management from EM Lyon (France) and a MSc in Economic Policy from Strathclyde
University.

Kaisa Huhta is a Senior Researcher and an Academy of Finland Postdoctoral Fellow at the UEF Law School and at the Centre for Climate Change, Energy and Environmental Law. Her research focuses on EU energy law. She has published more than 50 peer-reviewed journal articles, books, book chapters, expert statements and other publications and her work has appeared in top level international journals such as the European Law Review and the International and Comparative Law Quarterly. Dr. Huhta actively carries out consultancy work in the field of EU and Finnish energy law.

Ma/lgorzata Sadowska is a Policy Officer at ACER's Electricity Department, working on resource adequacy and security of supply. Before joining ACER, she worked at the Irish energy regulator, and prior to that she was a research fellow at the European University Institute, Florence School of Regulation, and Tilburg Law and Economics Center, Tilburg University, in the area of energy regulation and competition policy. Ma/lgorzata holds a PhD in Law and Economics (EDLE, 2013) and a Masters degrees in Law (University of Gda'nsk, 2006) and European Studies (University of Hamburg, 2008).