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The balancing mechanism allows RTE to modulate generation, consumption and trading to ensure that electricity supply and demand are always balanced. The mechanism involves the selection of bids submitted by balancing service providers based on the merit order and identified needs.
In 2020, total balancing volumes rose to their highest level since 2004, reaching 10.1 TWh, equivalent to 2.3% of gross consumption. Upward rebalancing saw the sharpest increase, rising 37%. This notably reflects social movements early in the year and significant unavailability of generation capacity during the summer.
Hydropower once again accounted for the majority of upward rebalancing, while nuclear was the dominant technology for downward rebalancing. The contribution of foreign countries to keeping supply and demand balanced in France, notably through Germany and Switzerland, was non-negligible. This was notably the case with upward rebalancing, requests for which reached their highest level since the mechanism was introduced and accounted for nearly 40% of the total.
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A supply-demand imbalance is considered to exist when RTE generates one or more messages about insufficient offers on the balancing mechanism (alerts or degraded modes) to encourage participants to submit additional offers.
There were far more tight situations on the balancing mechanism in 2020 than in past years. The heath crisis was one of the main reasons, given its impact on consumption, which was difficult for actors to predict in the face of unprecedented and repeated health measures, and on generation, particularly with nuclear capacity availability being far below average between June and September.
The number of instances that required upward rebalancing (when power consumption exceeded generation) rose to 163 half-days, more than twice the 2019 level. These situations can be caused by a wide range of factors relating to the availability of generation capacity (number of plants in maintenance and extensions thereof, reduced fuel use during the summer to prepare for the winter, social movements, unscheduled unavailability, environmental constraints).
Instances requiring downward rebalancing also doubled versus 2019, to 28 half-days (see box below, For a better understanding). Most of these situations occurred during the first lockdown, when downward flexibility was required.
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It is easy to imagine tight situations arising when electricity demand exceeds supply, but there can also be instances where the transmission system must contend with surplus supply because consumption is low (decline in activity due to holidays, weekends or bank holidays). Such situations occur more often in summer, when less power is used, but also on weekends in the spring, particularly when wind and solar output are high in Europe and demand is low.
At these times, France may need to export large quantities of energy to avoid ending up with too much supply. When the limits of export capacity are reached, RTE may request that generating units reduce or suspend their production temporarily. Because priority is given to must-run renewable sources, fossil-fired thermal and nuclear generation in particular may decrease substantially.
Instances of surplus generation have been increasing in recent years, notably because of the continued development of renewable energy sources (and their lack of participation in market mechanisms that would allow them to be modulated) and the rise in minimum production requirements for nuclear reactors (technical constraints declared by plant operators).
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The result of cooperation between TSOs initiated by RTE in 2013, the TERRE project was designed to replace BALIT (Balancing Inter-TSO); a mechanism of bilateral balancing energy exchanges between Spain, Portugal, the United Kingdom and France. The objective set when the project was launched was to improve balancing costs through the creation of a new market mechanism, replacing bilateral trading with multilateral exchanges. Other countries later expressed an interest in the new market mechanism and joined the initiative.
The network codes approved by the European Commission in 2017, and particularly the “Electricity Balancing” code, were inspired by this initiative to encourage TSOs to develop new standard balancing products and to design the market mechanisms and platforms required for them to be traded. At that point, the project became a major component of the construction of the European electricity market.
The European Commission’s objective in setting up these new platforms is to maximise Europe’s economic surplus (optimisation of social welfare) in terms of balancing costs for TSOs as well as economic opportunities for market actors. This is the first time balancing markets are being coupled in Europe.
With the launch of TERRE, RTE and other TSOs will have access to the flexibilities available at a European scale, to better ensure that supply and demand match at all times. TSOs will have access to more bids than today, and thus access to more flexible resources and lower prices. Balancing service providers can also offer their services to many TSOs, increasing their chances of earning revenue from their balancing resources on a cross-border market that is broader and thus gives them access to more demand.
On Wednesday 2 December, RTE conducted the first energy exchanges via TERRE, opening its first gate on the platform. This began a period of monitored operation, during which RTE will open more and more gates every day until it is fully operational with one gate per hour, seven days a week, in 2021.
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