Since electricity cannot be stored, EDF has to supply just the right amount of electricity, matching customer demand, at all times, at best cost. The aim of optimisation is to predict this demand and implement the necessary trade-offs between the resources available to satisfy demand (production resources, long-term supply contracts, purchases on wholesale markets, etc.). Optimisation of EDF’s production also consists in covering physical, financial, and market risks.
Regulation (EU) no. 1227/2011 (REMIT regulation) on the integrity and transparency of wholesale energy markets entered into effects on 28 December 2011 and is designed to enhance consumers and market players confidence in the integrity of electricity and gas markets.
Strengthening wholesale energy market integrity and transparency must foster open and fair competition on these markets, in particular so that prices set on these markets reflect a fair and competitive interplay between supply and demand. The regulation prohibits insider trading and market manipulation, and establishes an obligation to publish inside information as defined in the REMIT.
The European Agency for the Cooperation of Energy Regulators (ACER) is primarily responsible for monitoring wholesale trades in energy products, in order to detect and prevent transactions based on inside information and market manipulations. ACER also collects the data needed to assess and monitor markets. The regulation provides that market participants, or a person authorised to do so on their behalf, provide ACER with a detailed statement of the transactions in the wholesale energy market.
Market participants that perform transactions for which a declaration to ACER is mandatory must register with the national regulatory authority of the Member State in which they are established (the CRE in France) or, if they are not established in the European Union, that of a Member State in which they do business.
At a national level, national regulation authorities also work together and monitor wholesale energy product trading; Member States determine the regime for sanctions applicable to REMIT breaches.
In France, the applicable regulations are as follows:
The balance between electricity supply and demand is managed right down to a real-time basis, in line with the framework established by risk policies, developed in line with the Directives issued by the Group’s Risk Control Department and validated by EDF’s Executive Committee (see in particular section 2.2.2 “Financial and market risks”, risk factor 2C “Energy market risk”).
Climate variations affect this management. Hence, a fall in temperature of 1°C in winter leads to a rise in electricity consumption in France of the order of 2,400MW (1) and EDF’s portfolio bears a large part of this thermosensitivity. In addition, depending on the run-off, the amplitude of hydraulic generation in the
EDF scope, between one extreme year and another, can amount to around 20TW hours.
The DOAAT ensures that it has, in all timeframes, sufficient resources in order to enable it to meet its commitments. To do this, it manages a set of leveraged actions:
DOAAT also manages the exposure of EDF’s upstream/downstream portfolio to price variations in the energy and fuel (gas, coal, petroleum products) wholesale markets and in the CO2 emissions licensing market, with the assistance of EDF Trading.
With respect to RTE in its capacity as electricity transmission network operator, DOAAT plays the role of “balance responsible entity” on EDF’s perimeter in mainland France. In this regard, EDF is committed to financially compensate RTE in the case of a deviation onto its balance group. The optimisation consists of offering RTE an offer schedule that is balanced with the demand, which makes it possible to minimise the supply cost of EDF’s contractual commitments.
EDF maintains commercial relations through energy purchase or sales contracts with European operators. These contracts are of many types, and confer:
Please refer to notes 5.1.1 and 23 in the 2021 consolidated financial statements in section 6.1 and to section 1.4.2.1.1 "Competition".
Please refer to note 5.1 in the notes to the 2021 consolidated financial statements.
EDF is a mandatory purchaser of the electricity generated by the generation facilities the government wishes to support and develop (renewable energy sources and energy efficient cogeneration). By law (Article L. 121-7 of the French Energy Code), the additional costs stemming from this obligation are offset for EDF on the basis of an electricity market benchmark price (concept of “avoided cost”). Following the CRE resolution of 16 December 2014, all electricity purchased in this manner is managed within a dedicated ‘balancing perimeter’ for installations subject to Purchase Obligation (OA) agreements, implemented on 1 July 2015.
The DOAAT organises the sale of the energy produced by the installations under Purchase Obligation contracts directly on the energy markets, which makes the management of this perimeter completely independent of that of the EDF portfolio. Thus, since November 2015, electricity volumes under Purchase Obligations that can be forecast over the short-term (one day for the next, known as the “random component of the Purchase Obligations”) are sold on EPEX Spot. Since January 2016, the volumes which are foreseeable over the long term (share of the Purchase Obligations referred to as quasi certain) have been sold via transparent and non-discriminatory requests for bids.
Similarly, within a dedicated Purchase Obligation perimeter, the Upstream- Downstream Optimisation & Trading Division (DOAAT) carries out certification of the capacity of production installations subject to Purchase Obligations, together with the necessary rebalancing and sales to the market of the related capacity guarantees.
Since 1 January 2017, the management costs for this public-service mission have been offset.
(1) Source RTE.
