LONDON (Reuters) - Britain will hold its first auction for standby power capacity on Dec. 16, a model that will serve as a blueprint for other European countries planning to operate capacity markets that reward operators for holding power generation in back-up mode.
The mechanism is designed to tap additional electricity production at times of high demand when renewable energy sources such as wind farms and solar panels are not operating.
Capacity markets have split the opinions of European Union energy ministers, but France and Germany are now also considering setting up such frameworks to complement growing renewable energy production.
Europe's utilities are largely in favour of capacity markets because guaranteed payments will help generators make profits on essentially loss-making thermal power plants.
Britain's National Grid will publish results of operators who have pre-qualified for the auction on Oct. 3, with the first tranche of the capacity auction to follow on Dec. 16, Parliamentary Under Secretary of State Baroness Verma said in a letter to the grid operator.
The December auction will seek 50.8 gigawatts (GW) of capacity for the winter of 2018/19 and an additional 2.5 GW will be auctioned in late 2017.
(Reporting by Karolin Schaps, editing by David Evans)