Mapping of resource adequacy mechanisms by the European association of smart energy companies smartEn indicated that traditional generation assets prevail over distributed technologies.

The study, which updates previous mappings of demand-side flexibility and reviews fourteen countries, mostly in Western Europe, finds that the main obstacles continue to be limits to small distributed resources and aggregation.

Additionally, product design and prequalification requirements rarely include technology and often create implicit barriers to participation, while a market-based approach to resource adequacy is rare with purchases primarily made by the through tenders or bilateral contracts.

The study finds that the most common demand-side assets that participate are industrial loads through interruptibility systems, which have been specifically designed for them.

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However, while providing an attractive opportunity for large electricity consumers, in some cases, such as Germany, these schemes may conflict with tariff design, creating conflicting signals.

In terms of countries with resource adequacy mechanisms, the study finds that France and Belgium stand out.

In France, the participation of demand-side resources in resource adequacy mechanisms is advanced compared to other EU countries, although still quite limited compared to
traditional generation.

The adequacy of resources in France is guaranteed by a market-wide capacity mechanism. A call for tenders for interruptible loads is also organized to ensure the security of the system. In addition, the French network operator contracts capacities via an annual demand response call for tenders.

To date, about 3% of the total certified capacity on the French market is represented by load shedding.

In Belgium, in April 2021, a new capacity remuneration mechanism was introduced based on reliability options to guarantee security of supply from 2025.

The participation of demand response and storage in the first auction was significantly lower than that of conventional power plants, but it is reasonable to expect a greater participation of demand-side capacity in the next bid.

No ideal resource adequacy mechanism

“No ideal resource matching mechanism is in place and too many demand-side resource barriers still exist across Europe,” says Michael Villa, executive director of smartEn, of the findings.

“The [European] The Commission should ensure that all markets and mechanisms fully respect the principle of equal treatment established both in the EU Electricity Regulation and in the new State Aid Guidelines for the security of supply. This is a system efficiency priority, otherwise the costs of decarbonization will increase.

The study report points out that in general, resource adequacy mechanisms are a useful tool for maintaining system stability and solving resource adequacy issues.

With an expected increase in capacity needs across Europe, due to the increased volatility of renewables and the dismantling of traditional generation plants, resource adequacy mechanisms will play a key role in ensuring the stability of the system.

Demand-side flexibility and a market-based approach will be key to ensuring a stable network at competitive costs, the report concludes.

The countries mapped in the study in addition to Belgium and France are Finland, Germany, Great Britain, Greece, Ireland, Italy, Poland, Portugal and Sweden, as well only snapshots of Bulgaria, Lithuania and Spain.