The capacity market is a central component of modern energy markets that aims to ensure the availability of generation capacity, particularly in times of high demand or low generation from renewable energies. In such a market, providers of energy generation (e.g. power plant operators) are remunerated for the provision of capacity, regardless of whether this capacity is actually utilised or not. This ensures that sufficient energy is available at all times to meet demand.

In Austria and other European countries, the capacity market is becoming increasingly relevant as the integration of renewable energy sources such as wind and solar poses challenges. These energy sources are dependent on the weather and therefore cannot always guarantee a stable energy supply. The capacity market makes it possible to keep fossil fuel power plants or other flexible generation capacities available to compensate for fluctuations in electricity generation.

The Austrian energy market is part of the integrated European market and the regulations for capacity markets can vary from country to country. In many cases, a combination of market mechanisms and state regulation is used to ensure a secure and cost-efficient energy supply. One example of this is the Capacity Remuneration Mechanism (CRM), which is being trialled in various European countries to incentivise generators to make their capacity available during periods of high demand.

Another aspect of the capacity market is the promotion of investments in new technologies. By remunerating operators for providing capacity, operators are incentivised to invest in modern and efficient power plants that support the energy transition. This is particularly important in order to achieve the European Union's climate targets and promote the transition to a low-carbon economy.

However, critics of the capacity market argue that it could lead to overinvestment in fossil-fuelled power plants that are not in line with decarbonisation targets. It is therefore crucial that the capacity market is designed in such a way that it provides the necessary incentives for the development and operation of renewable energies.

To summarise, the capacity market plays an essential role in the energy market by ensuring security of supply and at the same time incentivising investment in new technologies. In Austria, the further development of this market is crucial for the successful integration of renewable energies and the achievement of national and European climate targets.