The goal in implementing a capacity mechanism in France is to guarantee security of supply over the medium term by covering risks during peak periods in winter. It was approved with conditions by the European Commission on 8 November 2016, and the market rules drafted for it were approved by the French Ministry of Energy and Energy Regulatory Commission on 29 November 2016.
The capacity mechanism in France
How the capacity mechanism works
The capacity mechanism rests on two pillars. First, it creates a requirement for obligated parties – mostly electricity suppliers – to obtain capacity certificates to contribute to the security of supply of their customers. Holding suppliers responsible in this way is notably a means of containing peak demand growth by creating an economic incentive to limit their customers’ consumption.
Second, RTE certifies the capacity of operators that agree to make their capacity available when demand peaks in winter. The capacity mechanism allows them to realise value on the availability of generation and Mechanism by which consumers cancel or postpone all or part of their power consumption in response to a signal capacity by selling capacity certificates.
Actors trade capacity certificates through organised market sessions or OTC transactions. During the delivery year, RTE notifies them of the peak days when they must uphold their individual commitments (“PP1” days for suppliers, “PP2” days for generators and other capacity operators). The calendar of these days can be found here.
After the delivery year, RTE informs suppliers of their final obligation level and calculates the actual availability of their capacity. Differences result in financial payments.