Publications, Factsheets, Working Group 9

Capacity Mechanisms

Published on April 13, 2026

In recent years, the electricity market has experienced strong fluctuations and frequent market interventions (e.g., windfall profit taxes in Austria, Germany, Italy, and Spain, or the introduction of
electricity price caps), which can significantly affect the security of supply. In addition, high shares of renewable energy sources (RES), driven by support mechanisms, have led to increasingly volatile generation patterns and a growing demand for flexibility, as well as for additional generation technologies and storage capacities. Moreover, heightened price volatility, uncertain geopolitical conditions, and short-term market interventions undermine long-term planning certainty and, consequently, weaken investment incentives. The main concern is that, alongside the continued expansion of RES to meet ambitious decarbonisation targets, the energy-only market may not provide sufficient incentives for new investments in the future.