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Capacity mechanism: new rules which now bring the mechanism completely into compliance with the European internal market

Source: RTE - DIESE 03/01/2019

The new capacity mechanism rules took effect on 29 December 2019, following the publication of the French NRA's notice of 20 December and the approval by the ministerial order of 21 December 2018. These new rules now bring the mechanism completely into compliance with the European Commission's decision of 8 November 2016 on State aid and include measures for simplifying and improving it.

The coming into force of the new capacity mechanism rules is the result of several years of consultation and dialogue, which began in 2016 with members of the Comité des Utilisateurs du Réseau de Transport d’Electricité (France's electricity transmission network users committee). With these new rules, the mechanism which guarantees the security of supply in France is now completely in compliance with the European internal market, as well as being legally sound.

This compliance process has brought with it several changes in order to meet the Commission’s three main requirements: ensure competition across the mechanism (change implemented in 2017), open up the French capacity market to crossborder stakeholdings and provide long-term signals for investment in new capacities.

The new rules detail the regulatory framework for explicitly taking into account crossborder capacities and issuing long-term invitations to tender. Starting in 2019, a "simplified procedure" will mean that the contribution of interconnections to securing supply in France can be taken into account. Moreover, four long-term invitations to tender will be issued in 2019, giving the new winning capacities the option to take advantage of a seven-year contract for the difference in capacity revenue.

These rules will also include measures to simplify the mechanism in terms of obligation and certification, and how the market operates. They introduce measures which clarify how storage, own-consumption and closed distribution systems are involved in the capacity mechanism.

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