French Capacity Mechanism « certification process »

April 2015

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1. CONTEXT

2. MARKET PLAYERS

3. DUTIES COMING WITH CERTIFICATION

4. DEMAND SIDE MANAGEMENT

SOMMAIRE

Mechanism of Capacity

DATE

CONTEXT

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Background

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A major risk to assess

To make Energy transition

succesfull, the electrical system

is faced with many

challenges

CONSUMPTION PEAKS CAN CREATE TENSION ON THE SYSTEM AND UNDERMINE THE SECURITY OF SUPPLY OF FRANCE.

New electricity usages

Development of renewable energy

Gap between the moments where electricity can be produced and those in which it is consumed

Security of Supply =

Ability to deal with winter peaks

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Engagement of availability from Consumers or

Producers

Obligation of suppliers to acquire guarantees relative

to the consumption in pekas periods

MAIN ISSUE

Capacity market allows to sell the availability or to cover suppliers’ obligation when the electrical system needs it

Reduce Consumption

Buy Guarantees

PP1 PP2

DATE

MARKET PLAYERS

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Obliged entities

Capacity Operators

Players

Based on the consumption of the

portfolio

ELECTRICITY SUPPLIERS

Based on availability

PRODUCERS

Help consumers to reduce their consumption during

peak times

DEMAND SIDE MANAGEMENT

ACTORS OF THE MECHANISM

Producers Demand Side Operators Consommateurs

Suppliers Consumers Grid operators for the

Network losses

Capacity Operators Production / Demand response

Obliged Entities

RESPONSIBLE OF A PERIMETER OF CERTIFICATION Wheter it is the capacity opertor or any actor who signed a contract with RTE

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HOW IT WORKS?

LIABILITY OF SUPPLIERS

PRICE OF CAPACITY

LIABILITY OF CAPACITY OPERATORS

Are available. Receive the same levels

of guarantees Obliged to cover thier portfolio

The price of capacity is linked to the security of supply.

Market for Guarantees Forecasted Production/Demand

Responses Forecasted consumption

1 Guarantee

• Renewables

1 Guarantee

• Thermal plants

1 Guarantee

• Demand response

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GOVERNMENT, REGULATOR AND RTE WILL NOT ACT ON THE MARKET. THEY HAVE A SPECIFIC ROLE OF ORGANIZATION, MONITORING AND CONTROL.

Rôle of RTE Rôle of regulator

CREATE CERTIFICATES

NOTIFY OBLIGATIONS

CHECK THE LEVEL OF ENGAGEMENTS

UPDATE REGISTERS AND MAINTAIN THE

MECHANISM

MONITOR THE MARKET

PUBLISH DATA on transactions, obligations and

certificates

SURROUNDING ACTORS

3 Years at the same time

2015 2016 2017 2019 2018

2020

Certification of existing power plants Certification of coming plants or demand response Obligation (forecasts / real time)

New parameters for delivery year 4 : 2020

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SCHEDULING

Year 2

Year 1

Year 3

Settlement

Settlement

THE MARKET OF CAPACITY IS NOT REPLACING EXISTING MECHANISMS SUCH AS : BALANCING DEMAND RESPONSE ENERGY SUPPLIES FEED IN TARIFF ANCILLARY SERVICES RESERVES (FRRA, FCR)

THE MECHANISM OF CAPACITY IS DESIGNED AS AN INSURANCE.

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A NEW MECHANISM

DATE

DUTIES OF A CERTIFIED OPERATOR

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1. CERTIFICATION IS A DECLARATIVE PROCESS 2. FIRST, OPERATORS WILL NEED TO LINK WITH A REPONSIBLE OF PORTFOLIO

3. CERTIFICATION ENTITIES (EDC) MAY BE GROUPED

MANDATORY FOR SITES STARTING AT 1 MW minimum of certification : 1 MW minimum of transaction : 0.1 MW (1 guarantee) VALUES WILL BE CHECKED DURING THE WINTER…

WHERE DOES IT START ?

No aggregation possible

Aggregation possible

Aggregation compulsory

Volume of capacity unit (MW)

1 MW

100 MW

CONNECTED TO ONE DSO GRID CONNECTED TO ONE TSO GRID VARIOUS DSO

CERTIFICATION PROCESS

CONTRACT WITH RTE

And

CONTRACTS DSO / Operators

Delivery of certicifaction Level

= NCC of production or

demand response

Registration of Certified capacities

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? MW

DSO

Request Contract Delivery of Guarantees

Registration

DSO

GRD GRD GRD DSO

CERTIFICATION PROCESS

Historical Certification

Declarative Certification

Volume de garanties calculé par RTE sur l’historique

NCC = Prod [historical] x Cfilière

REQUEST

Declarative Certification

NCC = Pavail [PP2] x Kweek x Kday

REQUEST

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Flexible Production

Fatal production

Any choice is defined for one year

TWO METHODS

NCC = Pavail [PP2] x Kweek x Kday

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Real Availability

Imbalances

MARKET OF CAPACITY

Sells

Forecasts

REAL LEVEL OF CAPACITY

CERTIFIED LEVELS

OR Activated Energy

CONTROL OF CERTIFICATION

Operators Production / Demand

Any Guarantee detained by

the RESPONSIBLE Will not be accounted.

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PP1 PP2

Periods in which the suppliers have to demonstrate their ability to cover the consumption of their portfolio of clients during winter

peaks

Operators are liable to a level of availabitilty for their capacities during periods of stress for the

system (PP2)

Days are scheduled from November to March (Excluding Christmas Periods) starting from 2017

Time frames : 7h – 15h and 18h – 20h

PP2 is longer than PP1 (between 10 to 25 days each year, with the same schedule starting on january to march and novembre to december in 2017)

Planned on day ahead for each day PP1, between 10 et 15 days per year (days of maximum consumption)

performs a posteriori controls on the basis of actual consumption to verify that the supplier has the necessary guarantees for the consumption of their customers

RTE : PP2 will adress also crucial situations for the system that are not linked to peak consumption periods.

« PP1 » AND « PP2 » STARTING FROM 2017

PP1 (MEASUREMENT OF CONSUMPTION) AND PP2 (MEASUREMENT OF AVAILABILITY) PEAK PERIOD PP2 Collection and control MEASUREMENT OF AVAILABILITY ET CONTROL OF CERTIFIED CAPACITIES NUMBER OF DAYS PP2 FOR EACH DELIVERY YEAR : [10 TO 25] EACH PP2 IS MANDATORY A DAY PP1 PP2 DAYS WICH ARE NOT PP1 DAYS WILL BE WARNED BASED ON A CRITERAI OF

TENSION FACED BY THE SYSTEM (DEMAND > OFFER)

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X X X X X X X X X X X

Exemple (january) PP1 PP2

OPERATORS : PEAK PERIODS PP2

REBALANCING COSTS DEPENDS ON THE DATE OF REQUEST : Penalties will be invoiced with the settlement of imbalances (knowing the total number of PP2). EXCEPT FOR REBALANCING IN CASE OF INCIDENTS DURING DELIVERY YEAR REBALANCING will be « free » but limited to 2 times for each responsible and each year.

Only certification costs will be applied (due to change of certified volumes)

Year of delivery Y-1 Y-2 Y-3 Y-4 Y+2

Costs of (new) certification Costs of (new) certification

+ Penalties related to the number of PP2 already

scheduled and total PP2 numbers

Y+1

15/01

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Certification

REBALANCING OF CAPACITY

1 : UPWARD

Transfer to RTE of the refunded volume

2 : DOWNWARD

Adding guarantees to the market

Removal of capacities from the market

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New capacities will be delivered to operators

Register of

Certified capacities

OPERATOR

ISSUANCE

MW

RESPONSIBLE OF

PORTFOLIO

Refund

MW

MARCHÉ DE CAPACITÉ

TWO CASES OF REBALANCING

MARCHÉ DE CAPACITÉ

Global rebalancing in the portfolio is affordable. Controls will still be adressed by each site

…

Control on energy

3 TYPES OF CONTROL ARE POSSIBLE :

- BY THE ENERGY ACTIVATED : Check of produced energy during PP2

- BY AUDITS : on records or on the site, between the date of entry into force of the contract for certification and the end of the year of delivery

- BY TESTS D’ACTIVATION from 0 to 3 tests

Each Capacity Entity has to be activated at least one for each year.

Control and collection of DATA 21

AUDITS

Needed tests

COLLECTION ET CONTROL

DSO

Year of delivery Y-1 Y-2 Y-3 Y-4 Y+2

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MANAGEMENT FEES

Certification Costs 10 €/MW (RTE) or DSO

Yearly fees for access to the register 1000 €/year

Transaction fees paid by the buyer

(rebalancing and first transfer to the RPC are excluded)

Audit and control costs on demand

Rebalancing costs free before delivery year

Yearly fees for access to the register 1000 €/year

Transaction fees 1 € / guarantee (with limitation)

Fees to calculate the level of consumption 4 €/MW (RTE) + DSO

Suppliers

Operators Production / Demand response

The price of settlement of imbalances is an incentive to favour the market.

The administered price cannot exceed 40 k€ / MW

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Two separated Imbalances

• Obliged Actor : Notified volume of obligation – guarantees in the portfolio

• Certified responsible : Real level of capacity – certified level of capacity

Reference Price of Market

Administered price

- 2 GW 0

HOW ARE IMBALANCES CALCULATED ?

Global Imbalances

Two prices to be defined

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DEMAND SIDE MANAGEMENT

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Flexible Consumer

Reduce (the consumption)

The level of obligation

Certification of Load

capacity

Activated during peak period : PP1 Need to activate the energy to reduce directly the consumption

Available during peak period : PP2 Need to be available Not mandatory to be activated

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2

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A CHOICE HAS TO BE MADE

Suppliers

Operators Production / Demand Reponse

EXEMPLE OF CERTIFICATION

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18 MW

Consumer Available

Consumer Activated

x0,93

x0,93

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20 18

MW 10 MW

10 MW

Or

In case of activation, energy will be compensated.

No demand response activated

Operators Production / Demand Reponse

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THANKS FOR YOUR ATTENTION

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Rules Contracts Practical guide Registers

HOTLINE CAPACITY MECHANISM phone : +33 1 41 66 71 03

mail : rte-mecanismecapacite@rte-france.com

FURTHER DETAILS

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http://clients.rte-france.com/lang/an/clients_traders_fournisseurs/services_clients/dispositif_mecapa.jsp