A new brief by The Green Tank analyzes the provisions of European legislation regarding capacity remuneration mechanisms (CRMs), outlines the technologies that other European countries are choosing to support via these mechanisms, and examines how these choices have so far affected consumers’ costs.
Lately, there has been growing public discourse in Greece about the introduction of a new Capacity Remuneration Mechanism (CRM), under which electricity consumers would financially support fossil gas power plants to ensure their availability around the clock.
Yet alongside announcements of new fossil gas plants, there have been no commitments to retire older ones, raising two crucial questions: first, whether all these gas plants are necessary for system adequacy, and second, whether their financial viability would require state aid via such a mechanism, potentially burdening electricity bills for consumers.
To avoid unnecessary strain on both consumers and the national economy, as well as to prevent derailment from national climate goals, it is essential to carefully assess the need for and preconditions of such a capacity remuneration mechanism, along with its specific parameters.
Analysis of current legislation and examples from other European countries has shown:
- The need for a new capacity mechanism must be demonstrated through a resource adequacy assessment conducted according to ACER’ s defined methodology.
- Minimizing cost for end consumers must be a priority for Member States when designing capacity mechanisms.
- The least costly capacity mechanisms are strategic reserves, in which participating units are withdrawn from the market and thus do not affect energy prices.
- Between 2015 and 2024, fossil gas plants dominated Europe’s capacity mechanisms, receiving nearly half (48%, or €43.5 bn) of total payments of €90 bn.
- However, the results of the most recent auctions in six European countries show a shift toward supporting clean flexibility solutions (batteries, RES, interconnectors, demand response), with their combined payments reaching €24.6 bn.
- In the UK, support for new battery systems in 2025 reached 1.8 GW—an 80% increase from 2024’s auction. A similar trend was observed in demand response (1.8 GW, +64%), and none of these auctions granted support to new gas plants.
- In Poland’s 2024 auction, of the 12 GW of capacity contracted, 2.5 GW came from battery systems, while an estimated 1.7 GW of fossil gas capacity failed to win contracts due to higher costs and lower competitiveness.
- In Italy’s latest 2025 auction, batteries competed directly with existing gas plants for the first time, securing 900 MW, and 95% (564 MW) of the 594 MW of new capacity contracts awarded were for battery systems.
““For a new capacity renumeration mechanism to be successful, once it has been proven necessary, it must be designed with the aim of meeting the country’s needs and aligning with national climate goals, rather than prioritizing the financial viability of investments of questionable necessity for the country’s energy adequacy.,” said Ioanna Souka, policy analyst at Green Tank.
“Greece should move in line with the latest European trends showing that strategic reserves and clean flexibility options lead to lower costs for end consumers,” added Nikos Mantzaris, policy analyst at Green Tank.
Notes for editors:
- Capacity Remuneration Mechanisms (CRMs) are a form of state aid that ensure sufficient capacity is available each hour to meet electricity demand—even in emergencies. Owners of capacity-providing units are paid for availability, regardless of whether they produce power.
- Read the full briefing here.
- Read the related Aurora report commissioned by the Europe-wide Beyond Fossil Fuels campaign here.