Demand response
  • Demand response is remunerated through a variety of mechanisms
  • Demand response on the balancing mechanism
  • The NEBEF mechanism
    • Impression

    Closer look

    Better understanding

    What is demand response?

    Demand response is an action intended to temporarily reduce, in response to a one-time request sent to one or more consumers by a demand response operator or electricity supplier, the electricity effectively withdrawn from the public transmission or distribution network at one or more consumption sites, relative to a consumption plan or consumption estimate (article L 271-1 of the Energy Code).

    Market players can use demand response to optimise their own portfolios or to sell energy directly to other users or to RTE. There are two main categories of demand response that contribute to the supply-demand balance:

    • • Industrial demand response, when consumption is reduced at one or more industrial sites (either by shutting down processes or by switching over to self-consumption). This type of demand response can be proposed either directly by the industrial user or through an aggregator or supplier.
    • • Distributed demand response, or the aggregation through an aggregator or supplier of individual demand response actions involving smaller volumes, all carried out at the same time by residential or professional customers.

    Demand response is remunerated through a variety of mechanisms

    France was the first country in Europe to open all parts of its national market to all consumers, including those connected to the distribution networks:

    • Since 2003, it has been possible to offer industrial demand response on the balancing mechanism.
    • Since 2008, RTE has been contracting with BRPs for demand response capacity to guarantee the availability of their capacity to the balancing mechanism.
    • Since 2011, RTE has been contracting demand response capacity that can be activated on very short notice for the mFRR (manual frequency restoration reserves). In 2020, demand response capacity made up 45% of the mFRR.
    • Since January 2014, it has been possible to sell demand response energy directly on energy markets through the NEBEF mechanism.
    • Between July 2014 and December 2015, only consumption sites connected to the public transmission system were able to participate in frequency ancillary services by offering demand response (1 MW minimum). Starting in January 2016, consumption sites connected to the distribution network have been able to participate in these same system services. These reserves, which can be automatically activated in timeframes ranging from a few seconds to a few minutes, are critical to keeping supply and demand balanced. Previously, only generation facilities could participate. In 2020, demand response capacity contributed 18% of the frequency containment reserve.
    • In 2018, demand response tenders became a support mechanism for the demand response sector. Organised by the Ministry of Energy, the tenders encourage the development of demand response capacity to meet the targets set forth in the Multiannual Energy Programme.

    Closer look


    In 2020, an exceptional call for tenders, initiated by public authorities, to secure additional demand response capacity

    The call for tenders for 2021 was adapted to the security of supply situation. A total of 1,366 MW of demand response capacity was selected, a 77% increase on the previous year. As in 2019, all demand response capacity selected was “green”.
    To boost security of supply, RTE and public authorities started working in the spring to adapt the support scheme to ensure that more demand response capacity would be available by the winter of 2020. These efforts are responsible for the increase in demand response capacity selected in 2021. In particular, the cap on bids was raised to €60k/MW, which allowed nearly 600 MW of additional demand response capacity to be secured relative to what was selected in 2019 for 2020.

    Moreover, the introduction of a bonus for demand response capacity made available starting in the months of November and December 2020 made it possible to secure an additional 371 MW over this period, and this helped improve security of supply in the first part of the winter of 2020 as well.

    Better understanding

    Demand response on the balancing mechanism

    The average demand response volume offered on the balancing mechanism was 729 MW, lower than the average for 2018 (874 MW). Total volumes activated increased during the year however, rising to 10.7 GWh from 7.6 GWh in 2019. The fact is that most demand response capacity has a capacity value, meaning it is offered at a high variable price and is thus activated in real time by RTE in times of significant stress on the power system, notably when the availability of generating units is reduced. In 2020, the number of instances of stress was particularly high. In these circumstances, the price of the last offers activated on the balancing mechanism matches or exceeds the high price of the demand response capacity offered, making the latter more economically appealing.

    Closer look

    Better understanding

    Demand response capacity on the market

    Closer look

    Better understanding

    The NEBEF mechanism

    The NEBEF mechanism (Demand Response Block Exchange Notification) allows market actors to realise value on demand response directly through the market. They inform RTE of the demand response they plan to activate the next day and can now re-declare schedules at the intraday scale. RTE verifies afterward that actual volumes correspond to the schedules submitted by participants.
    As of today, 22 demand response operators have contracts with RTE to participate in the mechanism. Twelve of them have received technical certification and are active.

    Demand response volumes selected through the NEBEF mechanism reached 11 GWh in 2020, half the level recorded in 2019. The downtrend is explained by the around €10/MWh year-on-year decline in the average spot price during the winter months, which limited opportunities to realise value on demand response on the market. Distributed demand response was down sharply from 2019: most demand capacity was activated in the remote read segment (industrial sites connected to the public transmission system), primarily in November and December 2020.

    Closer look

    Better understanding