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Towards a Europeanisation of EU
Capacity Mechanisms?
Madrid – OMIE Conference - (15 June 2015)
Arthur Henriot &
Jean-Miche...
Nota Bene:
1/ This work has been made at Florence School by Arthur and me
before Arthur joined the French TSO “RTE”
2/ Art...
The emergence of national capacity mechanisms
3
Different
Needs
Different
Resources
Different
Objectives
Source: ACER
The emergence of national capacity mechanisms (2/2)
French
« Capacity market »
Obligation on
suppliers
Decentralised
marke...
The emergence of national capacity mechanisms (2/2)
Probably no harmonized adequacy policy all over Europe
Yet autarky is costly
6
• Costs of national self-security are high (≈20% of IEM benefits):
- Uncorrelated demand & RES ava...
How much harmonization needed?
7
No need for a single product
BUT : need to take into account cross-border resources
need...
Assessing & remunerating cross-border resources :
implicit approach
8
• Assessing the overall contribution of cross-
borde...
Assessing & remunerating cross-border resources :
explicit approach
9
Cross-border
resource
availability
Interconnection
a...
Defining rights over system resources @times of
extreme scarcity (1)
10
How to measure heterogeneous efforts made to insu...
Defining rights over system resources @times of
extreme scarcity (2)
11
Solidarity will be needed anyway!
“Rarity”, “outs...
12
A bit more?
Email contact: arthur.henriot@eui.eu
http://fsr.eui.eu
www.florence-school.eu
Comillas & Florence School offers you full-fledged online
• A course directed by Ignacio Pérez-Arri...
www.florence-school.eu
www.florence-school.eu 15
Thank you for your attention
Email contact: jean-michel.glachant@eui.eu
Follow me on Twitter: @J...
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Towards a Europeanisation of EU Capacity Mechanisms?

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Madrid – OMIE Conference - (15 June 2015)
Arthur Henriot &
Jean-Michel Glachant
Director Florence School of Regulation
EUI - Florence

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Towards a Europeanisation of EU Capacity Mechanisms?

  1. 1. Towards a Europeanisation of EU Capacity Mechanisms? Madrid – OMIE Conference - (15 June 2015) Arthur Henriot & Jean-Michel Glachant Director Florence School of Regulation EUI - Florence
  2. 2. Nota Bene: 1/ This work has been made at Florence School by Arthur and me before Arthur joined the French TSO “RTE” 2/ Arthur is not member of the RTE “Market Design” team 3/ RTE is not involved with or engaged by what Arthur did when working at Florence School under my supervision.
  3. 3. The emergence of national capacity mechanisms 3 Different Needs Different Resources Different Objectives Source: ACER
  4. 4. The emergence of national capacity mechanisms (2/2) French « Capacity market » Obligation on suppliers Decentralised market British « Capacity market » Target administratively set Centralised auction
  5. 5. The emergence of national capacity mechanisms (2/2) Probably no harmonized adequacy policy all over Europe
  6. 6. Yet autarky is costly 6 • Costs of national self-security are high (≈20% of IEM benefits): - Uncorrelated demand & RES availability • Impact not limited to “generation adequacy”  National mechanisms must be “Europeanized” Exports to France from neighboring countries on February 8th 2012,19h00
  7. 7. How much harmonization needed? 7 No need for a single product BUT : need to take into account cross-border resources need to allow cross-border exchanges and remunerate external resources No need for an identical level of security of supply BUT : need to measure the efforts made by different countries need to allocate rights at times of extreme scarcity
  8. 8. Assessing & remunerating cross-border resources : implicit approach 8 • Assessing the overall contribution of cross- border resources (‘implicit approach’) − Lack of consistent methodology − Lack of consistent inputs  Avoiding oversupply by taking into account cross-border resources contribution, provided some common methodology and scenarios can be established.  Failing to remunerate external resources
  9. 9. Assessing & remunerating cross-border resources : explicit approach 9 Cross-border resource availability Interconnection availability Flow in the right direction Resource operator best able to manage this risk ? Interconnection operator best able to manage this risk ? Who will certify resources availability? Who can handle delivery risk in the absence of a regional system operator? How to remunerate: 1/ cross-border resources & 2/Interconnectors? Who is importing/exporting when markets are coupled? • Assessing the contribution of a specific resource (‘explicit approach’)
  10. 10. Defining rights over system resources @times of extreme scarcity (1) 10 How to measure heterogeneous efforts made to insure against scarcity and allocate energy at times of scarcity (or to set financial compensation)? Cannot be solved currently by short-term arrangements : low price-caps /equally shared curtailment How to build a set of economic incentives compatible with a spirit of solidarity?
  11. 11. Defining rights over system resources @times of extreme scarcity (2) 11 Solidarity will be needed anyway! “Rarity”, “outside […] regular expectations” “Extreme impact” Only “retrospective predictability”
  12. 12. 12 A bit more? Email contact: arthur.henriot@eui.eu http://fsr.eui.eu
  13. 13. www.florence-school.eu Comillas & Florence School offers you full-fledged online • A course directed by Ignacio Pérez-Arriaga (MIT, Comillas & FSR ) • 20 weeks of flexible online training • Exclusive access Pérez-Arriaga’s guidebook “Regulation of the Power Sector” • Direct interaction with a Faculty of leading experts (led by Comillas) • Support from the FSR Online Community • A Certificate of attendance (both Comillas & FSR ) • Price for public bodies & FSR donnors 1300 Euro; companies 1700 Euro 1st edition 2 February –5 July 2015 (near 200 people and 40 countries) 2nd edition September 2015 –January 2016 > registration open http://florenceonlineschool.eui.eu/
  14. 14. www.florence-school.eu
  15. 15. www.florence-school.eu 15 Thank you for your attention Email contact: jean-michel.glachant@eui.eu Follow me on Twitter: @JMGlachant already 8 800 tweets My web site: http://www.florence-school.eu

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