The capacity mechanism in France
The French power capacity mechanism is unique in Europe and a key tool for France’s security of supply encouraging adequate investment in generation and demand-response capacities.
The problem France has been facing is that with a higher share of renewables linked to the grid, while the global consumption decreased slightly, peak power demand has continued to trend sharply higher. The French capacity mechanism is designed to address this issue, encouraging adequate investment in generation and demand response capacities, while also incentivizing a modification of consumption behavior during peak periods and ensuring an sufficient remuneration to peak capacities which are running only few hours per year.
In practical terms, producers and demand response management operators are awarded capacity certificates (each representing 0.1 MW) corresponding to the available power capacity they can provide to the grid during peak periods defined by RTE (between November and March). Obligations to acquire capacity guarantees are assigned to suppliers based on their customers’ actual consumption during peak periods.
RTE (Réseau de Transport d’Electricité) was appointed as responsible for the operation of the mechanism and registry for capacity guarantees.
The role of EEX
EEX developed and operates an ad-hoc electronic registry solution for RTE that enables capacity guarantee certificates to be booked and transferred between market participants. Since 2015, the service offered by EEX to RTE has allowed market participants to monitor their capacity balance accounts and transfer certificates between each other. EPEX SPOT ran the first auction for certificates in December 2016. The system, cleared by ECC, is connected to the registry to perform the delivery of the capacity guarantees.