The New Capacity Mechanism: What Will Change for Suppliers and Consumers

On November 1st, 2026, France will transition to a new capacity mechanism.
While the objective remains unchanged — ensuring the security of electricity supply during periods of high demand — the operational framework is undergoing significant transformation.

The future system introduces a centralized mechanism structured around RTE and the French Energy Regulatory Commission (CRE), modifies the way capacity is procured, and changes how costs will be allocated among market participants.

With only a few months remaining before its implementation, it is essential for both suppliers and consumers to understand the core principles of the new mechanism, its operational functioning, and its practical consequences.

A Shift in Paradigm: From a Decentralized Market to a Centralized Mechanism

The current mechanism, which will remain in force until October 31st, 2026, is based on a decentralized model: each supplier individually assesses its capacity needs and purchases the corresponding guarantees from capacity operators.

The new framework, by contrast, is based on a centralized approach.
From now on, RTE will directly procure the capacities required to ensure the balance of the French electricity system.

The CRE will determine the overall capacity requirement, while RTE will act as the central operator of the mechanism, in charge of:

• contracting with capacity operators;
• organizing auctions;
• collecting and allocating costs;
• overseeing the operational management of the system.

Capacity prices will no longer result solely from bilateral transactions or over-the-counter trading: they will emerge through centralized auctions organized by RTE.

An Unchanged Objective: Ensuring Security of Supply

Fundamentally, the philosophy of the mechanism remains unchanged.
The system is still designed to ensure that sufficient production, demand response, storage, and interconnection capacities are available to meet the country’s electricity needs during winter peak periods.

The cost of this security of supply will continue to be borne by consumers, according to their contribution to periods of peak demand on the French electricity system.

In practice, the most critical periods remain concentrated during winter, when electricity consumption reaches its highest levels.

The Cycle of the New Mechanism

The new mechanism is built around a long-term cycle, spanning approximately four years and structured in several successive stages.

1. Assessment of Capacity Needs

Each year, RTE will assess the volume of capacity required to secure the electricity system.

This assessment will notably rely on:

• electricity consumption forecasts;
• energy mix evolution scenarios;
• import capabilities from neighboring countries.

For winter 2026–2027, the capacity requirement has been assessed at 79 GW.

This figure marks a significant decrease compared to previous years, during which capacity needs generally ranged between 90 and 100 GW. This decline mainly reflects the reduction in French electricity consumption observed in recent years.

2. Capacity Certification

To participate in the mechanism, each capacity must be certified.

Eligible capacities include:

• generation assets;
• demand response capacities;
• storage facilities;
• cross-border interconnections.

As France benefits from a highly interconnected network with neighboring European countries, import capacities will play an important role in maintaining system balance.

3. RTE Auctions

The core of the new mechanism is based on centralized auctions organized by RTE.

Two types of auctions are planned:

• a main auction, organized four years before the delivery period;
• an adjustment auction, organized a few months before the relevant winter period.

This second auction aims to refine forecasts in order to account for developments within the electricity system: new power plants, changes in consumption, renewable energy expansion, or available foreign capacities.

New Peak Signals

The current PP1 system will disappear and be replaced by new “PP” (Peak Period) days.

The operating logic remains relatively similar:

• 22 PP days per winter;
• notification on D-1 at 9:30 AM;
• applicable only during the electrical winter period, from November 1st to March 31st;
• time slots from 7 AM to 10 AM and from 5 PM to 8 PM on business days.

It is during these periods that consumers’ contribution to the system will be measured.
This contribution will then serve as the basis for allocating the cost of the capacity mechanism.

A Price Now Regulated by Caps

The future mechanism also introduces price caps defined by the CRE.

For winter 2026–2027:

• the overall price cap has been set at €72,000/MW;
• the cap applicable to existing capacities has been set at €15,000/MW.

The overall cap corresponds to the annualized investment cost of developing a new combined-cycle gas turbine power plant, currently considered the benchmark technology for covering peak electricity demand.

The lower cap applicable to existing capacities reflects the fact that a significant share of the generation fleet has already been amortized.

Nevertheless, the final price will result from the auctions organized by RTE and will only be known once the auctions are completed.

What Impact for Consumers?

The overall cost of the mechanism will be allocated among suppliers according to a quota based on their historical deliveries during winter peak periods.

Suppliers will then pass these costs on to their customers.

For large consumers, billing will most likely be directly linked either to:

• the actual power drawn during PP days;
• or an estimated value adjusted ex post.

For smaller consumers, allocation methods may be more standardized or forfait-based.

In all cases, the regulation leaves suppliers with a degree of flexibility regarding how they pass through the cost of the mechanism.

Increased Attention to Supplier Contracts

The implementation of the new mechanism implies changes to contractual clauses relating to capacity costs.

Consumers should therefore expect to receive amendments or new contractual provisions from their suppliers.

In a context where billing methodologies may differ from one supplier to another, consumers will need to:

• understand the calculation mechanisms;
• review contractual clauses carefully;
• verify the consistency of invoiced amounts.

Consumers with access to detailed load curve data will notably be able to recalculate their theoretical contribution to the mechanism in order to challenge, if necessary, the amounts invoiced by suppliers.

A Structural Reform of the French Electricity Market

The new capacity mechanism represents a major evolution in the organization of the French electricity system.

Without altering the historical objective of security of supply, the reform centralizes the management of the mechanism around RTE and the CRE, modifies price formation mechanisms, and transforms the way costs are allocated.

For suppliers as well as consumers, the coming months will be decisive in anticipating the operational, contractual, and economic impacts of this major reform of the French electricity market.