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Capacity Mechanism: Regulatory Marathon Concludes with Full Framework

With the publication in the Official Journal of March 22 of the following texts:

The framework for the new capacity mechanism is finally complete and published, bringing to a close what has been a real regulatory marathon that often felt more like a race against time.

The main milestones in its implementation were as follows:

  • Article 19 of Law No. 2025-127 of February 14, 2025 (Finance Act for 2025), which established the legal foundations of the scheme (Articles L. 316-1 to L. 316-13 of the Energy Code)
  • Then a year-end rush in 2025:
    • 22/12/2025: approval of the mechanism by the European Commission for a period of 10 years starting in November 2026, with a total estimated aid amount of €20 billion over 10 years, i.e. €2 billion per year (potentially €20,000/MW based on 100 GW of obligations). The Commission considered that the mechanism complies with EU treaties and the 2022 Guidelines on State aid for climate, environmental protection, and energy.
    • 31/12/2025: publication of Decree No. 2025-1441 of December 31, 2025, relating to the capacity mechanism established to ensure security of electricity supply. This decree accordingly amends the Energy Code:
      • Chapter V of Title III of Book III of the Energy Code
      • Book III, Title I of the Energy Code is supplemented by Chapter VI

The mechanism

The CRE itself, during its workshop of February 6, 2026, summarizes the new mechanism (comparing it to the current one):

Previous mechanism New mechanism
Demand Decentralized demand:
  • Obligated parties are responsible for the strategy of acquiring capacity guarantees
  • To cover the consumption of their customer portfolio during peak periods
 Centralized demand:
  • For each auction, the demand curve is set by public authorities
  • RTE contracts the successful capacities during auctions
Number of auctions
  • Up to 15 per delivery year (DY-4 to DY+3)
 Reduction in the number of auctions
  • Maximum 2 per delivery period (DY-4 and DY-1)
Remuneration framework Administered price (equivalent to a price cap) Global price cap (€72/kW) and intermediate price cap for existing capacities (€15/kW)
Multi-year contracts
  • Ad-hoc mechanism (AOLT)
 Possibility of multi-year contracting for new capacities in certain auctions
Support for low-carbon flexibility
  • Ad-hoc mechanism (AOFD)
 Volume reserved for low-carbon flexibility in auctions

Next steps : 

The race against time now shifts to market participants:

  • Application for exemption from the Intermediate Price Cap before April 1, 2026

  • Certification application before April 15, 2026

  • And preparation for the auction scheduled in July

Impact on consumers : 

Assuming that security of supply is ensured, at least in the short to medium term, the CRE has focused its efforts on ensuring that this mechanism is implemented at the lowest possible cost for consumers.

Taking into account the price caps and disregarding exemptions, the impact on consumers is effectively capped at approximately €3.6/MWh.

 

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Diego obtained a bachelor’s in Science in Political Economy from the King’s College London, and later a dual Master’s in Management and Computer Science from the IE University of Madrid.

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She is also a Consultant at Haya Energy Solutions, specialising in the optimisation of energy procurement through the analysis of market trends and regulatory developments. She also provides strategic guidance to identify opportunities and tailor solutions to the specific needs of each client.

Céline holds a degree in Philology from the Sorbonne University and holds a master’s in Project Management and Cultural Tourism from the University of Clermont-Ferrand.

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His career started in civil engineering as a Project Manager in France, Martinique and Australia. Afterwards, he became the General Manager of a subsidiary in Venezuela. In 1992, he established Dalkia in Germany (district heating, cogeneration, and partnerships) and represented Véolia in Thailand. In 2000, he opened the commercial office of Endesa in France to take advantage of the liberalized retail market. From 2006, as a development Manager at Endesa France, he led Endesa’s plan for Combined Cycle generation in France and developed the wind and PV portfolio of Snet at the same time. 

Philippe worked for 3 years at E.ON’s headquarters coordinating the company´s activities in France. He was strongly involved in the French hydro concession renewal project. As a Senior Vice President – Project Director at Solvay Energy Services from April 2012 to February 2014 he was in charge of the H2/Power to gas and European direct market access deployment projects. Philippe has been an HES expert since 2014.

Philippe holds engineering degrees both from the Ecole Polytechnique and the Ecole Nationale des Ponts & Chaussées (France) and has a combined experience of more than 25 years in energy and infrastructure. In addition to English, Mr. Boulanger is fluent in French, German & Spanish.

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Prior to this, Antonio was CEO of KKR’s CELEST Power in France (2x410MW CCGT). He was also CEO of Endesa France and General Secretary, Strategy & Corporate Development Director at E.ON France. Formerly, he held different positions at Endesa, including Responsible for M&A at Endesa Europe and Regulation Specialist at Endesa Distribution.

Antonio holds an MBA from the University of Deusto and a degree in Industrial Engineering from the Higher Technical School of Engineering of the University of Seville.

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