The price of electricity capacity guarantees in France for 2025 fell to €0 per MW during the last auctions in early December.
Reminders on the capacity mechanism
In 2017, a “capacity mechanism” was set up in France to contribute to the security of supply of the French electricity system(1). Concretely, means of production (or shedding) can be, after certification by RTE(2)be paid to remain “available” during winter peak periods which generate tension situations on the network.
It is the electricity suppliers who finance the cost of the system: each of them must demonstrate(3) that it is able to cover the consumption of its customers each year during winter “peak” periods and thus has the obligation to acquire capacity guarantees (GC) corresponding to this level of demand(4).
Capacity guarantees can be purchased over the counter or during market sessions organized several times a year by Epex spot in the form of auctions.(6). In 2024, 6 auction sessions took place on Epex Spot(5)the last having taken place from November 25 to December 5 (for capacity guarantees in 2025 and 2026).
Explanations on a “null” auction
The result of these latest auctions, announced on December 5 by Epex Spot, is cause for concern: the price of the guarantees has fallen to… €0 per MW for delivery in 2025 and €2,522.18/MW for delivery in 2026(7).
The collapse in the price of capacity is, among other things, linked to confidence in the security of the electricity network, with lower demand peaks than in the past and good availability of production facilities. In fact, “ the flexibility mechanisms allowing a good supply-demand balance in real time seem to work well; we can therefore, in the event of insufficient supply, hope to play on demand”, to which is added a growing contribution from short-term storage capacities in the form of batteries, underlines Jacques Percebois, professor emeritus at the University of Montpellier
For Nicolas Goldberg, energy partner at Colombus Consulting, “ the most rational explanation lies in the fact that suppliers had probably already stocked up on capacity at the end of the year where we can only see a falling consumption, which has a downward impact on the need and therefore prices, in a context where certain players stake their capacity at zero price to be sure of being selected ».
In other words, the volume of certified capacity available was greater “ as needed at the end of the year, knowing that this need is calculated on the consumption of the actors’ portfolios on PP1 days » (consumption peaks defined by RTE). Ultimately, “ everyone faltered so as to be called and sensing the surplus of supply compared to demand ».
Impact on invoices
The amount of capacity guarantees is passed on to consumers’ bills. However, this cost differs depending on the customer, the type of contract and consumption during peak consumption (peak days known as “PP1” and “PP2”).
It will therefore result from this auction “ a reduction in the TRV because the capacity cost is a component of the stacking carried out by the CRE in the calculation of the TRV », underlines Jacques Percebois(8).
The impact on invoices will however be “ minimal compared to what the capacity mechanism represents in an invoice », notes Nicolas Goldberg. In 2024, the additional cost linked to capacity guarantees was estimated between 0 and 5 €/MWh depending on the consumer profile (the average annual consumption of a 70 m household2 is around 9 MWh if it has electric heating, and less than 1.5 MWh without electric heating according to Selectra(9)).
A reform to come
The capacity mechanism, operational since 2016 and authorized until 2026, “ is currently being overhauled for winter 2026-2027 and will have to support the development of new flexibilities required for security of supply », specifies the project of 3e PPE
This reform should in particular make it possible to “ avoid allowing fossil power plants to benefit from such a system and also because there are too many windfall profits; therefore wait-and-see and caution do not encourage paying for a guarantee that does not seem essential », underlines Jacques Percebois. Uncertainty persists regarding the upcoming implementation, however, underlines Nicolas Goldberg, “ given the political context ».
In total, the average level of auctions for delivery in 2025 (taking into account previous auctions) is €14,650 per MW, compared to €27,090 per MW in 2024. An upcoming auction session for capacity guarantees on Epex Spot will take place from February 24 to March 6, 2025(10).
