Updates: last update's detail

Successful start-up of the Balancing Mechanism on 1st April 2003.

Source: RTE 01/04/2003

RTE is setting up a new market tool today, the Balancing Mechanism. Only the electricity supply and demand balancing activity had not yet been opened to competition.

Four participants made bids at the first gate of 4 p.m. on Monday, 31 March 2003. These players are both French and European power producers and consumers. Several gates are thus proposed throughout the day.

The 4 p.m. gate makes it possible to receive bids for the following day. After having received the producers' call-up programmes at the same time at 4 p.m., RTE can then mobilise balancing bids so as to adapt these schedules to the consumption forecasts made for the next day.

The 8 p.m. gate offers an additional possibility to the players to make new bids, re-declarations, for the following day.

Five subsequent and additional gates are proposed at 3 a.m., 8 a.m., 11 a.m., 2 p.m. and 5 p.m. allowing the players who so wish to complete, for the actual day, the bids proposed the previous day.

To provide a clear view and good understanding of this Balancing Mechanism, RTE has created a new section on its Web site: "Life of the power system / Balancing mechanism".
From now on, the following information will be published every day:
- daily operating margins at consumption peaks on D-1
- trends and balancing prices every half-hour
- daily balancing energy volume after the daily gates at 3 a.m., 8 a.m., 11a.m. 2 p.m. and 5 p.m.
- imbalance settlement price every half-hour
- daily capacity/price curve on D+1

After the setting up of a European call for bids for the purchase of energy to compensate for system physical losses and of specific mechanisms to allocate interconnection capacity with the neighbouring countries, this real-time supply and demand Balancing Mechanism is the last point which completes RTE's contractual scheme. It enables RTE to have power reserves at all times so as to make use of them whenever an imbalance between supply and demand occurs. One must be reminded that electricity is a product which cannot be stored, and the power system is constantly subjected to contingencies. These are first covered by automatic control devices installed in all generating facilities in France and Europe. This is what is known as "primary control" and "secondary control". To make up for large-scale contingencies (sudden swing in temperature, sudden power transmission line outage, shut-down of a power plant or a sudden drop in consumption, congestion on the power transmission network) which give rise to major imbalances, RTE must have, in real time, an upward, as well as a downward, balancing bid. Before the creation of this mechanism, EDF provided this balancing energy de facto.
Henceforth, these bids will be proposed by the participants within the scope of this new mechanism and used by RTE in the order of economic precedence.

This new, non-discriminatory market tool is intended for all of the players, power producers and consumers who have a flexible generation or consumption activity. It thus serves to make optimum use of this flexibility by remunerating those who permit the balancing actions, as well as to get each participant to face up to his responsibilities. Those who cause the imbalances will have to bear the financial consequences. The player who has caused the imbalance will pay the price corresponding to a price based on the weighted average of the bids used to compensate for the imbalance. If the imbalance that has occurred reduces the gap, the price paid corresponds to the market price, i.e. to the list on the Powernext exchange.
This market represents between 8 and 10 billion kWh per year, i.e. about 2% of French power consumption.

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