Czech Capacity Mechanism Approved by the European Commission: ČEPS Launches the First Auctions

On 16 July 2026, the European Commission decided not to raise objections to the Czech capacity mechanism (Case SA.120741) and found it compatible with the internal market under Article 107(3)(c) of the Treaty on the Functioning of the European Union (TFEU). The mechanism is a market-wide, auction-based mechanism with a central buyer, designed to address the structural shortage of electricity generation capacity in the Czech Republic, particularly in connection with the phase-out of coal-fired generation.

On 6 August 2026, the Ministry of Industry and Trade issued a general measure of a regulatory nature introducing the capacity mechanism, and on 14 August 2026, ČEPS launched three capacity auctions on this basis: two additional auctions (for delivery from 1 November 2030 and from 1 November 2031) and one main auction (for delivery from 1 November 2032).

Key points

The European Commission found the Czech capacity mechanism compatible with the internal market.
The mechanism responds to the structural capacity shortage caused by the phase-out of coal-fired generation.
It is a market-wide mechanism with a central buyer (ČEPS) and capacity allocation through “pay-as-clear” auctions.
ČEPS launched the first auctions: two additional auctions (delivery from November 2030 and 2031) and the main auction (delivery from November 2032).
The estimated budget of CZK 75–150 billion is fully financed through charges paid by electricity consumers.
Support may be provided for ten years from the date of the decision; capacity contracts for fossil-fuel sources may have a maximum duration of 15 years.

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