Markets are tools for optimising the power system


RTE works around the clock, seven days a week, directing electricity flows over its lines to ensure that generation and consumption are always balanced at the least possible cost to society. This balance is achieved through a series of decisions aimed at optimising the power system, from the long term down to real time. These decisions are taken by private actors, whose actions are coordinated thanks to the market mechanisms through which their activities are rewarded.

Increasing the flexibility of the power system is also clearly identified as key to a successful energy transition, notably given the intermittent nature of renewable sources. RTE’s market rules are well-suited to allow the participation of new, flexible capacities, as they allow all operators to be rewarded for their capacity and energy via markets (demand response, storage, renewable energy sources, etc.).

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The role of balance responsible parties


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The balance responsible party system allows consumers, producers, suppliers and traders to conduct all types of commercial transactions in electricity markets, on timeframes ranging from several years ahead to almost real time. Thanks to the flexibility this system provides, market participants can respond to a wide variety of contingencies and uncertainties. Each balance responsible party creates an activity portfolio and agrees to settle the costs resulting from imbalances between generation and consumption within that portfolio, as recorded after the fact. The parties have a financial incentive to maintain a balance within their portfolios and thus contribute to the balance of the French power system.

As of 31 December 2019, there were 182 balance responsible parties with valid contracts. Of these, 145 were active during the year and 45 made significant injections or withdrawals.

Transactions between balance responsible parties were about 5% lower than in 2018. Purchases of ARENH power nonetheless rose by 25%. This increase partly explains the decline in OTC transactions between balance responsible parties (block exchange programmes, or BEP). Indeed, market participants that hedged their purchases (at least partially) with ARENH had less need to engage in other types of transactions.

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Record ARENH purchase volumes

In 2019, demand for ARENH among alternative suppliers reached an all-time high of 132.98 TWh, exceeding the 100 TWh cap for the first time. This record demand reflected market prices that were well above the ARENH price of €42/MWh during the ARENH gate at the end of 2018. The Energy Regulatory Commission (CRE) allocated the 100 TWh in proportion to the demand expressed by suppliers with the exception of EDF subsidiaries, which received none of it.
In addition to this 100 TWh, 20.4 TWh were allocated to system operators to cover their losses.

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Intraday trading volumes


Though the number of transactions declined, intraday trading volume continued to rise, ending the year about 13% higher. These mechanisms give balance responsible parties flexibility to operate as close as possible to real time. Their need for flexibility is notably increasing as renewable energies come to account for a larger share of the energy mix, since generation from these sources is more difficult to forecast.

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