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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What role do balance responsible parties play?

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 2020, there were 190 balance responsible parties with valid contracts in France. Of these, 152 were active during the year and 46 made significant injections to or withdrawals from the grid.

Total transactions between balance responsible parties rose between 2019 and 2020. Volumes traded (purchases and sales between balance responsible parties on the day-ahead and intraday markets, excluding cross-border flows and trades between NEMOs) reached 237.3 TWh, up 20.6% from a year earlier. OCT transactions (block exchange programmes, or BEP) increased by 6.8%, and the cap for ARENH purchases was reached, as was the case in 2019.
The uncertainty created by the health crisis undoubtedly made some portfolio adjustments necessary, which in turn contributed to the sharp increase in transactions on wholesale electricity markets.

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Record demand for ARENH

Demand from alternative suppliers for ARENH to be delivered in 2020 reached an all-time high of 147 TWh in 2020, exceeding the 100 TWh cap for the second year in a row. This record demand reflected futures prices that were above the ARENH price of €42/MWh during the ARENH gate at the end of 2019. 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, 26.2 TWh were allocated to system operators to cover their losses.

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Intraday trading volumes


Intraday trading volumes surged 22% in 2020, climbing to a record high. 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. Intraday trading also proved particularly useful when the health crisis was creating uncertainty.

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