European regulations and their implementation at national level
Establishing the internal market in electricity is a strong policy ambition for the European Union. Its aim is to facilitate trade in electricity between Member States to benefit from the most competitive resources in Europe at any given time. It is based on several guidelines determining a set of common rules.
The regulatory framework for balancing consists of European regulations, French legislation (set of laws, decrees, orders, grouped in the French Energy Code) as well as the terms and conditions relating to scheduling, the balancing mechanism and recovery of balancing charges and the frequency ancillary services terms in consultation with and approved by the CRE.
European regulatory framework
The European Union’s legislative acts are drafted by the Commission and approved by the European Parliament and the Council of the European Union. There are two types:
Regulations are directly applicable across the Member States.
Directives must be transposed into the national law of each Member State to achieve their objectives.
The energy sector is governed by the “clean energy” package, which consists of a set of regulations and directives on electricity markets, security of supply, the governance of the Energy Union or renewable energies. This package is regularly updated.
Other regulations, which are not part of this package, also regulate RTE’s activities. This is the case with the “Electricity Balancing Guideline” and “System Operation Guideline,” which provide the main axes for the Europeanisation of electricity balancing. Being directly applicable in the Member States, the implementation of the terms of this regulation leads to a gradual evolution of the rules relating to balancing mechanisms on the national level.
Electricity Balancing (EB) Guideline
The European regulation Electricity Balancing entered into force on 18 December 2017. Its objective is the establishment of a balancing market at the European level, on the one hand, by encouraging each market player to present a balanced perimeter in “real time” and, on the other, by giving transmission system operators the means, through a competitive process of European flexibilities, to compensate for any residual national imbalance at the best cost.
The Electricity Balancing Guideline establishes the technical, operational and commercial rules relating to the acquisition of balancing capacity, activation of balancing energy and their financial settlement. Competitive balancing energy bidding on common platforms for the exchange of balancing energy on the scale of the European Union will have particularly positive effects on competition.
RTE is in charge of implementing the Guideline on Electricity Balancing in France in consultation with national and supranational regulatory authorities and market players. This step is decisive because the Electricity Balancing Guideline involves important developments for RTE as well as for market players since it relies on the use of standard balancing energy products: RR = Replacement Reserve, mFRR = manual Frequency Restoration Reserve, aFRR = automatic Frequency Restoration Reserve, FCR = Frequency Containment Reserve, and involves several European countries in different projects.
In this capacity, RTE joined the TERRE project for the implementation of a platform for activation of balancing energy that can be activated in under 30 minutes (RR), the MARI project for activations in less than 15 minutes (mFRR), the PICASSO project for automatic frequency restoration reserve (aFRR) and the FCR cooperation for contracting of frequency containment reserve (FCR).
To prepare for the transfers of balancing, RTE has begun to assess the existing situation, presenting the issues and proposing initial areas for change. These proposals are presented in a Green Paper entitled French electricity system balancing roadmap.
System Operation Guideline (SOGL)
The European regulation System Operation Guideline entered into force on 14 September 2017. It defines the security rules and requirements for operating the interconnected electricity grid to build common bases for a transition to a more harmonised power system operation between countries and a truly integrated supply-demand balance market at European level.
The System Operation Guideline is structured around the following three main themes (1) operational security, (2) operational planning, and (3) load frequency control and reserves.
This last part directly interacts with the security model (based on the margin monitoring principle) and the current national supply-demand balance management model. In particular, the SOGL requires TSOs to establish the conditions and methodologies defining the operating rules and the roles and responsibilities of the European TSOs within the Continental Europe Synchronous Area.
In accordance with Article 118 of the SOGL Regulation, TSOs of the Continental Europe Synchronous Area have developed a synchronous area operational agreement called the Synchronous Area Framework Agreement (SAFA) which entered into force on 14 April 2019. This agreement contains the common proposals that have been approved by European regulators:
In accordance with Article 119 of the SOGL, RTE has developed a Load-Frequency Control Block operational agreement (LFC block) in force since 14 June 2019, defining the operational rules and responsibilities within the LFC block and meeting the requirements of SOGL. This operational agreement, which has a supporting document, consists of two parts:
- Dynamic constraints (ramping) on generation and consumption;
In accordance with the LFC block agreement, below is RTE’s summary of the common ramp rate restrictions on HVDCs between France and Great Britain: RTE applies common restrictions to respect a maximum ramp variation of 100 MW/min per interconnection link under normal operation for the variation of the commercial schedule programme between two market time intervals. The behaviour predicted by RTE under normal conditions is a linear variation of the commercial schedule programme between two market time intervals over the period of variation between 5 minutes before and 5 minutes after the change in market time intervals.
- Frequency restoration reserve (FRR) capacity volume dimensioning;
- Measures applicable by RTE to balance the power system.
In addition, the System Operation Guideline requires TSOs to establish security requirements for the various balancing products of the power system: FCR, FRR and RR.
In accordance with Article 156 of the SOGL, TSOs have developed an Cost-benefit analysis methodology for units with a limited energy reservoir supplying frequency containment reserve (FCR) approved by the European regulators.
National regulatory framework
Under French law, the functioning of balancing mechanisms is governed by the French Energy Code, in particular Articles L.321-9 and following.
The Energy Code, developed by the French legislator, thus defines RTE’s public service missions. It also lays down the broad outlines of balancing mechanisms as a mission entrusted to RTE and the requirements for developing and publishing the terms and conditions.
The process of revising the rules relating to balancing mechanisms
The terms and conditions relating to scheduling, the balancing mechanism and recovery of balancing charges and the ancillary services terms and conditions detail how balancing mechanisms operate. They are developed by RTE, in coordination with distribution system operators, and involving all stakeholders in the development of the proposal. They must be approved by the CRE prior to entry into force.
These terms and conditions are regularly revised to adapt the functioning of balancing mechanisms to changes in the French legislation and regulations, as well as to European harmonisation work and the entry into force of specific regulations.
The revising of terms and conditions involves a rich and regular consultation process. It allows the proposed changes to be developed in relation to DSOs and market participants involved in balancing mechanisms, and to take into account their proposals and feedback.
The various steps of the terms and conditions revision process
Consultation with market participants on planned developments:
- Meetings in working groups.
- Calls for contributions.
> Drafting of terms and conditions.
Making the draft terms and conditions available to market participants and gathering their feedback:
Draft terms and conditions.
Submitting the draft terms and conditions for approval by the regulator:
Draft terms and conditions.
> Deliberation of the CRE
Due to the recurring changes in the legislative framework of balancing mechanisms, updates to the terms and conditions are usually required every year, or even twice a year. This consultation process, which extends over several months, is therefore put in place whenever a development is proposed.