Capacity Remuneration Mechanism

The introduction of a capacity remuneration mechanism for the Belgian market is part of the federal government’s energy strategy, which lays out a number of new measures designed to guarantee Belgium’s security of supply in the long term.



2021 Major milestones



FAQ

You will find below a list of frequently asked questions regarding Capacity Mechanism Remuneration.

Participation assessment

  • How are evoluting the derating factors in time?
    Derating factors settings are associated to an Auction and are decided by the Energy Minister. Once they are known, the apply to the upcoming related Auction and are fixed for the Transactions resulting of that Auction. The future potential of the capacity of the CRM Prequalified Candidate to acquire obligations is calculated on the update of the derating factors for the new Auctions or Secondary Market transactions.
  • Is the threshold of 1MW for the mandatory participation after application of the derating factors?
    Yes, the 1MW threshold applicable to the eligible capacities is to be considered after application of the associated derating factor.
  • Are my capacities above the threshold of 1MW considered as eligible capacities if their variable subsidies (operational aid) are stopping prior November 2025?
    Yes, the capacities above the 1MW threshold (after application of the derating factor) are considered eligible capacities if they don't have any variable subsidies (operational aid as e.g. GSC, CHP certificates) on the Delivery Period. The status on the operational aid is then not to be considered on operational aid at the prequalification moment.
  • I don't have a submeter, am I under a mandatory with my eligible production unit?
    Yes, the absence of a submeter dedicated to a production unit could not imply the removal of mandatory participation if applicable.
  • My CDS has not signed yet the Annex 14, what are the consequences for a CDS User?
    The CDS User is recognized in the CRM Functioning Rules as the Capacity Holder only if the CDSO signed the Annex 14 of the connection contract.
  • Does the legal obligation of the capacity holder (Grid Users or CDS Users) transferred to the mandated cpty?
    The legal obligation of prequalification of a capacity holder remains on the Grid Users or the CDS User even if the Grid User Declaration is signed with another counterparty. Once the mandated counterparty do prequalify properly, it is its responsibility to inform the Grid User or CDS User of the Capacity.
  • Are each turbine of a windmills park considered individually for the prequalification mandatory participation?
    No, the obligation is to be considered by park of the capacity type on the customer premise. So that 10 onshore windmills are considered as one in the assumption of the mandatory prequalification.
  • Can I cumulate energy market revenues (spot revenues, mFRR, aFRR revenues, …) with the CRM remuneration?
    Yes. The CRM is a financial support. It comes on top of the energy market revenues but couldn't be cumulated with other functioning aid (variable subsidies, e.g. GSC, WKK/CHP certificates) for the delivery period. Therefore, a conditional abandon of the subsidies could be declared in the prequalification. It will be conditioned to the successful selection in the Auction so that no functioning aid is lost due to the CRM in case of non selection in the CRM Auction.
  • Abandon of other subsidies conditional to success in the Auction?
    Yes. The CRM is a financial support. It comes on top of the energy market revenues but couldn't be cumulated with other functioning aid (variable subsidies, e.g. GSC, WKK/CHP certificates) for the delivery period. Therefore, a conditional abandon of the subsidies could be declared in the prequalification. It will be conditioned to the successful selection in the Auction. The CRM support may be cumulated with other types of investment subsidies that are not considered as functioning aid (as described in the Royal Decree on cumul).
  • Is the CRM only in supporting the direction of available capacities to provide electrical energy or to decrease consumption?
    Yes, the CRM is supporting the availability of the capacities to propose production or consumption decrease. An increase of the consumption is then not in the framework of the CRM and has no added value for the CRM objective.
  • Which Derating Factor is applicable to my capacity/delivery point in the framework of the Prequalification process?

    The CRM Candidate follows the decision tree and deducts in the below table of the Derating Factors category which one is applicable and inserts such information in the Prequalification File.

  • Daily schedule stands for?
    A capacity is considered with Daily Schedule obligation if it has an individual MW schedule obligation, which is today considered for TSO connected units above 25MW. All others are considered as without Daily Schedule Obligation CAT.
  • If I'm not under a mandatory participation in the prequalification process? Are there any administrative step?
    No, the Capacity Holder of of a non-eligible capacity has no obligation to act in the prequalification process. On the contrary, he may create a set of capacities complying with the CRM participation requirement to prequalify but has no obligation to do so.

Prequalification process

  • Is an additional CMU sufficient to cover the prequalification obligation of the Law for the eligible capacities?
    According to an alignment with Authorities, if the CRM Candidate could prove (on demand) that its Existing delivery point is not capable to prequalify and could not be able to provide the Service for the considered Delivery Period in the current technical situation, the capacity could be prequalified as an Additionnal delivery point.
  • How do I prequalify my capacity in a Fast track prequalification process without submeter and related EAN as it is a mandatory field?
    If no submeter is applicable to the eligible capacity performing a Fast Track Prequalification process, then the CRM Candidate is allowed to enter the EAN of the Headmeter to which the capacity is connected.
  • May I aggregate in a CMU my recognized Delivery points of my Steam Turbine and of my Gas Turbine if one of those is >25MW?
    If the turbines (or other production capacities) are recognized in the Individual MW Schedule Schedule obligation as above 25MW and TSO connected (named with daily schedule), those delivery points participate in individual CMU (each).
  • Does the absence of the right meter requirement creating an additional DP?
    The absence of the metering requirements (Annex A1 of the Functioning Rules) of a capacity is implying that the delivery points shall be considered as an Additional Delivery point in the Standard prequalification process.
  • No possible Opt-Out OUT for the existing capacities in Y-4?
    It is possible to select an Opt-Out in the Y-4 for predefined reason to be selected for either the full or entire volume of the capacity. This is exposed in the table of the Functioning Rules section 5.6.2.2.. Yes, the selection of an Opt-Out OUT category is limited in Y-4 to the: (1) non-firm capacity as part of G-Flex Contract, (2) to the decommissioning associated as a condition in a signed technical agreement of another CMU that participate in the Auction only in case a bid is selected in the Auction that relates to a CMU with a conditional signed technical agreement that includes as condition that a CMU to which the Opt-Out Volume relates has to be decommissioned; or (3) to a temporary closure notification or temporary structural reduction of capacity. All other reasons related to existing capacities are leading to an Opt-Out IN category and imply a consideration in the reduction volume for the Auction.
  • What is the aim of the financial security of 10000€/MW for the existing CMUs and of 20000€/MW for the additional or specific CMUs?
    As the Auction is based on a gate for the offers, all bids will compete in the Auction algorithm at the same moment, meaning the selection of the awarded bids will discard some others. The discarded bids imply a release of the associated/part of the FInancial Security. Nevertheless, as the selection implies an automatic Capacity Contract for the awarded CRM Prequalified Candidates, it avoids gaming. On top, the service obligations in the Pre-delivery Period are to be covered by a sufficient incentive to deliver. As no payments are foreseen in the Pre-delivery period to the Capacity Providers, the Financial Security purpose is then to be seen as collateral in case of non-payment of the potential penalties. As reminder, the Financial Security of the Additional is partially released in the Pre-Delivery period with the achievement of key milestones, with a value set at 10000€/MW once becoming Existing CMUs.
  • What is the ultimate deadline for the Prequalification Process of the upcoming Auction?
    The ultimate deadline is the 15th of June 2021 for the Prequalifications files submission. Please note that the Prequalification Files submisssion could only occur in case of validated Application Form by Elia of the CRM Candidate, a mandatory step that may take up to 5WD on its own, this is to be considered to respect the 15/06 deadline. No extension is foreseen (except in case of IT fallback procedure). Therefore Elia invites the CRM actors to introduce them properly in May 2021 in order to facilitate the process.
  • How can I decrease my participation in the CRM Auction if I assume my potential Eligible Volume in MW after application of the derating factor remains too high in comparison with my capability to deliver the service on the (pre-)delivery period?
    By default in a standard prequalification file, the Opt-Out is settled at zero MW for the CMU. The Opt-Out permits to decrease the Eligible Volume partially of entirely. The Opt-Out is to be declared on the Nominal Reference and this before application of the derating factor. It is not possible increase the Eligible Volume through the Opt-Out, its only purpose is to decrease the potential Eligible Volume for the upcoming Auction.
  • May I already enter a Prequalification file for 2022?
    Yes, after the Prequalification file validated in 2021, the results remains valid in time at the condition the rules are not evolving in time. In case, those evolves, then the CRM Candidate will be requested to confirm or update.
  • Do I have to submit a prequalification file each year?
    On the principle, for each organized Auction by the Minister, it is possible that the Capacity Holder has to or could submit a prequalification file. Of course, Elia plans to facilitate the re-use and the confirmations of the previous parameters already filled-in with enhancements capabilities.

Auction

  • Are the volume of Fast Track prequalification processes considered in the CRM?
    The Fast Track prequalification process is developped for the Capacity Holders of the eligible volume having a mandatory participation for a capacity but having no willingness to offer a bid in the Auction, and therefore are performing a full Opt-Out. Through the Opt-Out notification, it is assesses if the Opt-Out is IN (contributing to adequacy) or OUT (not contributing to adequacy). In the CRM Auction, dummy bids are inserted for the capacities of the Fast Track Prequalification process having an Opt-Out IN. In all cases, the dummy bids never imply any Capacity Contract for the capacities following a Fadt Track prequalification process.
  • The Auction occurs each year for Y-4 and each year for Y-1 as of 2024?
    The upcoming Auctions are organized based the instruction of the Minister of Energy on a yearly basis. Once requested, Elia prepares the Auction and the associated prequalification process.

Capacity contract

  • Are there any clause negociable?
    No, the Capacity Contract of the CRM is a regulated contract, approved by CREG. No clause could be modified. The Transactions are well updated in the Annexes.
  •  What is the impact on my potential contractual obligations of the Derating Factors evolution in time?
    Derating factors settings are associated to an Auction and are decided by the Energy Minister, therefore those are also associated as a feature of the Transactions of the Capacity Contract resulting from awarded bids in the Auction. Once they are known, the apply to the upcoming related Auction and are fixed for the Transactions resulting of that Auction. The future potential of the capacity of the CRM Prequalified Candidate to acquire obligations is calculated on the update of the derating factors for the new Auctions or Secondary Market transactions.

Pre-delivery period

  • In the Functioning Rules, it is specified a frame of 36h in case of pre-delivery test (or prequalification process test). What should be defined as duration to validate the parameters during the test? For the Energy Constrained CMUs, is this test related to the SLA chosen number of hours, could it last that amount of chosen hours?
    Within the framework of the prequalification, in paragraph 109 of the functioning rules (absolute value of the difference between the lowest QH measurement over the test duration and the minimum highest QH measurent and zero), this delta is to be considered over the test period and it will therefore not require within the framework of a demonstration of the Service for 36h. The delta must be observed between QHs in this timeframe of 36h. This is also explained in Appendix A17 of the Functioning Rules. The same logic applies to the pre-delivery test.
     
  • Possible long maintenances of the existing assets in the pre-delivery period?
    It is of course possible to perform maintenances on the existing capacities during the pre-delivery period. Nevertheless, as the concept is to monitor the capabilities of the capacities to deliver the Service as of November 2025, , the pre-delivery obligations at specific moments called Pre-delivery controls in the Section 7.3.1., the Capacity Provider shall consider those controls in its maintenance planning in order to avoid Pre-delivery control penalties resulting from a Missing Capacity.

Delivery period

  • What is happening for the CMU without Daily Schedule if the Reference Price is above the Strike Price and the Declared Market Price? What is happening if the Reference Price is below the Declared Market Price and above the Strike Price?
    If the Reference Price is above Strike Price and the Declared Market Price, and is an AMT hour, the Volume Required is the associated volume to the partial Declared Day Ahead Price (DDAPp) and ELIA uses the Required Volume for Availability Monitoring during AMT Hours where a Payback Obligation occurs. The Payback Obligation is calculated in that case on the positive difference between the Reference Price and the Declared Market Price. In the other scenario, if the Reference Price is below Declared Market Price but above the Strike Price, no Available Capacity is calculated and the Payback Obligation is at zero.
  • Is the Service requiring a net injection on the grid?
    Not especially, the Service is provided at the delivery point and the Obligated Capacity is compared with the Available Capacity which is not especially requiring an injection on the grid. As reminder, the Availability checks are performed on the Availability of the capacity and not especially on the activations, increase for production capacities, or reduction of consumption for demand side response. 

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