CRE proposes economic eligibility and duration criteria for France's multi-year capacity mechanism contracts

CRE (French energy regulator) issued Deliberation n°2026-185 (17 Sept 2026) proposing concrete economic criteria for multi-year capacity mechanism contracts: three cumulative tests for which investment expenses count toward the €125,000/MW investment threshold (accounting-based capex classification certified by a statutory auditor; necessity to meet R.316-36 eligibility; expenditure window from 1 Jan 2022 to the day before delivery period start), plus a new Final Investment Decision (FID) timing criterion requiring that FID not be taken before auction results are published (with ex-ante declaration and ex-post monitoring by the comité de suivi). CRE also proposes differentiated maximum contract durations by investment category (15 years for new generation/storage, 12 years for uprates/CO2-reduction investments, 10 years for life-extension and demand-response capacities), replacing the initially consulted approach with a more granular categorization, subject to the cap of the project's projected amortization period certified by an auditor.

These criteria will directly determine which capacity investments qualify for multi-year (vs. single-year) capacity remuneration in France's centralized capacity mechanism, shaping investment incentives, competitiveness of bids in upcoming auctions (notably PL-4), and the balance between funding new capacity for resource adequacy versus protecting consumers from prolonged capacity payments (rente) for assets that may become unnecessary. The FID timing criterion in particular is designed to ensure public capacity payments only trigger genuinely new investment, addressing a core additionality concern in capacity mechanism design.

This deliberation operationalizes the EU State aid clearance (SA.117564, 22 Dec 2025) for the reformed French capacity mechanism by translating high-level parameters (125 €/kW threshold, 15-year cap) into auditable, cumulative eligibility tests. The shift from four to three expense-eligibility criteria (dropping the 'non-recurring' test) reflects a pragmatic accommodation of major maintenance work bundled with conversion/uprate/life-extension projects — a design choice that widens eligible capex without diluting the additionality principle embedded in the FID criterion. The FID criterion is the most contested element, drawing 16 of 26 respondents' opposition largely on verifiability and interaction with storage grid-connection agreements; CRE resolves this by noting the concurrent decree removed the mandatory signed connection agreement for storage eligibility, thereby easing the FID-timing conflict. On duration, CRE explicitly rejected the capex-tiered approach (unanimous opposition) and the fully discretionary/auditor-validated approach (mixed support, criticized as beyond auditor competence) in favor of technology-normative caps benchmarked against RTE, ACER ERAA, DESNZ and IEA references — a methodologically transparent but administratively rigid approach that market participants flagged as potentially misaligned with real asset lifespans (thermal plants viewed 15 years as too short; batteries viewed it as possibly too long). This is a domestic capacity-mechanism design event with no direct cross-border market-coupling implications, but it materially affects investment underwriting, auction bid competitiveness, and financing structures (interest during construction now explicitly includable) for capacity providers in France.

French Energy Code articles L.316-1 to L.316-13 and R.316-1 to R.316-42; Décret n°2025-1441 of 31 December 2025; Décret n°2026-771 of 13 August 2026; European Commission State aid decision SA.117564 of 22 December 2025; ministerial arrêté to be issued on CRE proposal per article R.316-40

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Primary sources