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 incentivising a modification of consumption behaviour during peak periods.
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. 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 Powernext
Powernext 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 Powernext 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.
Other services to the power sector
Powernext has been providing other services to the power sector. On top of its activities of registry for capacities and for GOs, Powernext was operating the registry for Virtual Power Plant (VPP) nomination rights. The VPP mechanism was implemented to speed up the opening to competition of the French electricity market. A part of the historical producer's nuclear capacity was auctioned to competitors. VPPs allowed competitors to reserve nuclear capacity for a certain period varying between 3 and 48 months. The mechanism was stopped in 2011 following a decision of the European Commission.