Commission approves Czech capacity mechanism under Clean Industrial Deal State Aid Framework

The European Commission has approved, under EU State aid rules, Czechia's market-wide capacity mechanism. The measure aims to ensure there is sufficient capacity to produce or store electricity, or to reduce electricity consumption so that production meets demand in the long term. It is the first capacity mechanism approved under the Clean Industrial Deal State Aid Framework (CISAF) adopted by the Commission on 25 June 2025.

The Czech measure

Czechia notified to the Commission, under the CISAF, the introduction of a capacity mechanism to ensure security of electricity supply. The measure will run for 10 years as of July 2026, with contracts for a maximum of 15 years. The measure is designed as a market-wide capacity mechanism, which compensates parties that make capacity available during periods of scarcity. These parties include existing and new generation assets, storage and cross-border capacity. There is also a possibility for demand-side response, where consumers get remunerated to lower their consumption in response to reduced electricity supply. The participating units comply with the applicable CO2 emission limits set out in EU legislation.

By remaining technologically open and competitively awarded, the mechanism seeks to ensure that security of supply is maintained at the lowest possible cost, while supporting the integration of cleaner and more flexible resources into the electricity system. Aid will be granted through competitive bidding processes. Capacity providers will be selected based on clear, objective and non-discriminatory criteria. The mechanism includes eligibility conditions and technical prequalification requirements to ensure that only reliable and available capacity can participate. The measure is structured to minimise distortions of competition and to limit support to what is strictly necessary.

The capacity mechanism will be financed through consumer charges, with an estimated overall budget ranging from €3.1 billion to €6.2 billion, the exact amount depending on auction outcomes and system needs over time.

The first timeframe for which capacities will be allocated capacity agreements under the mechanism is the period from November 2030 to October 2031. The Czech authorities will organise the necessary preparatory steps and auctions ahead of that delivery window, in line with the approved tender design and with applicable EU rules.

The Commission's assessment

The Commission assessed the Czech measure under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the EU (‘TFEU'), which enables Member States to support the development of certain economic activities subject to certain conditions, and the CISAF.

The Commission found that the Czech capacity mechanism meets all requirements set out in Annex I of the CISAF. This implies that:

• The measure is necessary and appropriate to address expected electricity adequacy risks identified for Czechia, in line with the EU Electricity Regulation. The need for the capacity mechanism is supported by the findings of the last available European Resource Adequacy Assessment (ERAA 2025), which forecast emerging risks to security of supply from 2028 onwards.
• The measure is proportionate as the level of the aid corresponds to the effective financing needs. The aid will be granted to projects selected through a transparent, non-discriminatory bidding process, with safeguards to ensure effective competition. Beneficiaries will compete based on the amount of aid requested per MW of capacity available during a scarcity event. As a result, the measure has a limited impact on competition and trade between member States.

On this basis, the Commission approved the Czech measure under EU State aid rules.

Background

On 25 June 2025, the Commission adopted the CISAF to foster support measures in sectors which are key for the transition to a net-zero economy, in line with the Clean Industrial Deal.

The CISAF allows the following types of aid in order to accelerate the clean transition:

• Measures accelerating the rollout of renewable energy and low-carbon fuels (sections 4.1 and 4.2). Member States can set up schemes for investments in all renewable energy sources as well as energy storage, with simplified tender procedures. Specific rules are also provided to accelerate the roll-out of low-carbon fuels.
• Measures allowing temporary electricity price relief for energy-intensive users to ensure the transition to low-cost clean electricity (section 4.5). Such measures will help avoid industrial activities relocating to locations where environmental regulations are absent or less ambitious, before the decarbonisation of the EU's electricity system fully translates into lower electricity prices.
• Measures facilitating the decarbonisation of industrial processes (section 5). Member States can support investments in the decarbonisation of industrial activities to reduce dependency on imported fossil fuels. This can happen through electrification, energy efficiency and the switch to the use of renewable and electricity-based hydrogen which complies with certain conditions, with expanded possibilities to support the decarbonisation of industrial processes switching to hydrogen-derived fuels.
• Measures to ensure sufficient clean technology manufacturing capacity (section 6). Member States can grant investment support for strategic projects in line with the Net Zero Industry Act (such as batteries, solar panels, wind turbines, heat-pumps, electrolysers, and carbon capture usage and storage). This also includes the production of key components and the production and recycling of related critical raw materials.
• Measures to de-risk private investments required for the roll-out of clean energy, industrial decarbonisation, clean tech manufacturing, certain energy infrastructure projects, and projects supporting the circular economy (section 8).

More information on the CISAF can be found online.

For more information

The non-confidential version of the decision will be made available under the case number SA.120741 in the State aid register on the Commission's competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.