The electricity market is organised around four main areas: production, transmission, distribution and marketing. Other activities, such as brokerage and trading on the OTC market or on the power exchange, have an impact on the balance between supply and demand for electricity.
STRUCTURING AND OPERATION
In France, electricity is produced by different complementary technologies: nuclear, thermal, hydro, wind and photovoltaic.
• Nuclear production: use of an atomic reaction.
• Hydraulic production: use of water power via dams.
• Fossil fuel thermal generation: the use of the combustion of oil, coal or natural gas.
• Wind generation: use of wind power.
• Photovoltaic production: use of energy provided by solar rays.
HYDROPTION offers its customers 100% green electricity if they so wish. We are thus participating in the development of small producers of Renewable Energies.
Electricity transmission and distribution
As electricity is very difficult to store, it must be produced and transported in real time to the places of consumption.
The electricity transmission system – managed by RTE – allows very high voltage (VHV) and high voltage (HV) electricity to be transmitted over long distances. Near the places of consumption, electricity is routed to the distribution networks.
Some large companies are directly supplied from the transmission grid, but for most consumers, the voltage of electricity must first be lowered. Transformers are then installed between the High Voltage and Medium Voltage networks. The electricity is then delivered to end consumers by the distributor. In this case, invoicing is carried out on the basis of consumption data collected or estimated.
In France, the public service company ENEDIS (former ERDF) is in charge of managing these distribution networks.
HYDROPTION is a balance responsible to RTE and ENEDIS (formerly ERDF).
Marketing is the activity of selling electricity to consumers. It is at the interface between distributors and end customers. This activity, which is open to competition, consists in retailing electricity – purchased in bulk or produced – possibly providing additional energy-related services.
The supplier therefore acts as an intermediary: it purchases the electricity from the producer and forwards it through the transmission system operator and the distribution system operator to the consumer, the final customer.
HYDROPTION SAS is authorised to carry out the activity of purchasing electricity for resale to final customers and network operators for their losses – Ministerial Order of 22 September 2015.
WHAT IS A POWER EXCHANGE ?
Power exchanges offer a trading platform to exchange members submitting bids for buying and selling power. They organize markets that are optional and anonymous and accessible to all participants satisfying admission requirements. The main objective of power exchanges is to ensure a transparent and reliable wholesale price formation mechanism on the power market by matching supply and demand at a fair price and insure that the trades done at the exchange are finally delivered and paid.
The European Energy Exchange (EEX)
The European Energy Exchange (EEX) is the leading energy market in Central Europe. It develops, operates and links secure, liquid and transparent markets for energy and related products. On the spot and EEX derivatives markets, electricity, natural gas, CO2 emission allowances, coal and guarantees of origin are traded.
EEX participants can negotiate electricity contracts (weeks, months, quarters, years) up to 6 years in the future. Futures are financial contracts, but they can be physically delivered in Germany, France, Austria, Belgium, the Netherlands and Italy.
Furthermore, guarantees of origin are also negotiable on the EEX derivatives market. These are certificates that confirm that a given MWh has been produced from renewable resources. These guarantees of origin can be exchanged for up to three years in the future.
HYDROPTION is a member of the European Energy Exchange (EEX) for the French market.
The European Power Exchange (EPEX SPOT)
The core business of the European Power Exchange (EPEX SPOT) is the management of a short-term organised electricity market covering Germany, Austria, France and Switzerland.
EPEX provides a marketplace where members send orders to buy or sell electricity in given delivery areas. EPEX SPOT’s role is to match its orders transparently, in compliance with market rules, which set, among other things, the execution priorities and algorithms used in order matching. Transactions produced by EPEX SPOT are agreements that oblige the parties to buy or sell a specified quantity of electricity for a given delivery area at market price.
HYDROPTION is a member of the European Power Exchange (EPEX SPOT) for the French market.
HYDROPTION aims to federate renewable energy producers in order to market their electricity to SMEs and SMIs.
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What are the new rules ?
Since 1 January 2016, the Purchase Obligation (PO) contracts for renewable energies have been replaced by a variable rate, consisting of the market price plus a premium. The bonus will be paid once the beneficiary project (wind, solar power, etc.) is operational, and its amount will vary in order to guarantee a target level of remuneration set for each sector, but not exceeding it.
Understanding the end of the Purchase Obligations
What are the new rules?
The Yellow and Green Regulated Sales Rates (RST) for professional and industrial consumers disappeared on January 1, 2016. These consumers must now choose a new contract as a contract offer from the supplier of their choice.
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Hydroption buys and sells green electricity and offers market risk hedging solutions for electricity buyers and producers.