CRE launches public consultation on defining virtual hydroelectric capacity products EDF must auction under new concession reform law

On 3 September 2026 the CRE opened public consultation N°2026-14 seeking market feedback on the principles for defining the electricity products (and sub-products) that EDF will be required to auction as part of a 6 GW virtual hydroelectric capacity divestiture mechanism created by Law n°2026-554 of 29 June 2026. The consultation covers product taxonomy (fil-de-l'eau/éclusé vs. lac/STEP flexible products, including swing options, injection/withdrawal options and simplified VPP contracts), delivery maturities and granularities, risk-sharing methodology, forward/day-ahead/intraday/balancing market targeting, and auction modalities (pricing format, reserve price, collateral, qualification criteria). Responses are due by 16 October 2026 23:59, after which the CRE must submit a report with product-definition proposals to the Government.

This consultation operationalizes a major structural reform of the French hydroelectric sector: EDF, which controls ~70% of national hydro production, must open at least 40% of installed hydro capacity (initially 6 GW) to third parties via competitive, transparent, non-discriminatory virtual capacity auctions over a 20-year period, replacing the prior concession renewal impasse that had drawn EU pre-litigation scrutiny. The product design choices under consultation will determine how much of EDF's flexibility and market power is genuinely transferred to competitors, shape liquidity and price formation across French forward, day-ahead, intraday and balancing markets, and set a template for hydro-based virtual capacity mechanisms in other EU markets facing similar concession-renewal disputes.

The consultation sits at the intersection of market power remediation and product engineering: CRE must translate statutory volume splits (1.5 GW fil-de-l'eau/éclusé; 1 GW risk-free lac/STEP; 2 GW risk-shared aggregated capacity; 2.25 GW less-flexible products) into tradeable contracts that are both attractive to a heterogeneous buyer base (suppliers, aggregators, producers) and faithful to physical hydro constraints (power tunnels, stock levels, hydraulicity risk). Key design tensions flagged by CRE include: (i) simple vs. complex products — complexity increases flexibility value but favors sophisticated buyers and may impair price formation/liquidity due to thin competition among capable bidders; (ii) risk transfer — firm products shift hydraulicity risk to EDF and could reduce offered volumes, while risk-shared products require robust data/indicator provision to buyers; (iii) whether products should carry embedded ancillary-service revenue, capacity-mechanism revenue, or guarantees of origin: a competitively important question given EDF's incumbent optionality across these adjacent markets; (iv) auction mechanics (pay-as-clear vs pay-as-bid, reserve price methodology, collateral/rating requirements, secondary market tradability) that will determine subscription success. The explicit reference to 2028 as the first auction year, and to the CRE's own recurring review cadence (1, 3, then every 3 years), signals a multi-year phased rollout rather than a single go-live event, with the ministerial arrêté (following CRE and Autorité de la concurrence opinions) as the actual binding design-lock milestone after CRE's report.

Loi n°2026-554 du 29 juin 2026 relative à la relance des investissements dans l'hydroélectricité (Article 12, notably IV, V and VI); French Code de l'énergie (Article L.521-16 and related concession provisions); CRE public consultation N°2026-14 of 3 September 2026

Consultation response deadline · 16 Oct 2026

Primary sources