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French Capacity Market: an innovative mechanism for securing the power supply of France

Source: RTE - DC 10/04/2014

 

Réseau de Transport d’Electricité (RTE – the french TSO) has submitted, on wednesday 9 April 2014, for approval of the French Minister for Environment, Sustainable Development and Energy, and for opinion of the French Energy Regulatory Commission (CRE), a proposal of new rules regarding the organisation of the electricity market in France. These rules proposed by RTE after a consultation of marked stakeholders are defining and giving structure to the capacity market. This new market will contribute, starting in winter 2016-2017, to ensure appropriate security of supply for electricity in France. Aimed to stimulate investments in power plants and demand-response, the rules of the mechanism of capacity shall participate in making successful the energy transition by fostering a change in consumers behaviours.

Entrusted by the French government to define this new market, RTE, after one year of consultation which brings together all stakeholders, has proposed an innovative mechanism in order to maintain in a sustainable way, the security of supply of electricity, specifically during cold spells.

For each delivery year electricity suppliers are required to show clear evidence that they are able to guarantee the consumption of their clients during peak time. They shall, to fulfil this legal obligation, hold capacity certificates.

These certificates are delivered by RTE to the capacity operators (producers or to the Demand Side Management operators) attesting the availability of their facilities during the mentioned periods. In exchange for this availability, the capacity operators may afford an earning.

Designed to assist the energy transition, the rules of the mechanism of capacity allow suppliers in France to reduce their obligation when clients lower their consumption of electricity at peaks, and give an incentive to a more sober energy consumption. These load reductions will play a crucial role to limit the rise of peak demand in consumption.

The approval of these rules by the minister in charge of Energy and the adoption of the provisions to be defined by the CRE will pave the way to the establishment of this mechanism.