How to became an electricity supplier
The number of electricity suppliers in France increases every year, a sign of the dynamism of the French retail energy market. There are 57 suppliers for businesses and 39 for individuals.
Is the market saturated, though? Well, not really. In Q4 2020, 304,000 residential customers and 76,000 companies switched from EDF to an alternative supplier. This steady influx of new customers, quarter after quarter, creates significant development opportunities for new suppliers. Many companies outside the energy sector (large retailers, telecoms, etc.) have successfully entered the market.
But how does one become an electricity supplier? Isn’t it too complicated? We will try to outline the steps in this article.
Administrative procedures
The supply of electricity is a regulated sector. If you want to became an supplier, you need to obtain specific authorizations and signing certain agreements even before delivering to the first customer.
The main authorization to obtain is, of course, the authorization to purchase and sell electricity to end consumers, issued by the Ministry in charge of energy (DGEC). The future supplier must provide documents that identify the company, a description of its future activities/target markets, and evidence of the company's financial capacity (balance sheet, profit and loss statement, business plan, etc.), as well as a signed contract with a balancing responsible party (which we will come back to later).
Once the complete file is received, the Ministry has three to six months to make a decision. What’s important here for the future supplier is to demonstrate that their project is mature and that they have the financial capacity aligned with the expected development of their business.
Another important step to take upon receiving the supply authorization is signing a GRD-F contract with Enedis. This contract will allow the new supplier to operate on the Enedis network, offer unified contracts (collection and payment of TURPE to Enedis), and access Enedis' IT platform (SGE), which facilitates customer switching, retrieval of metering data, and more.
Finally, another important step is to remember to sign a contract as a mandatory participant with RTE. As a new supplier, you are required under the capacity mechanism to purchase capacity guarantees. You will also need to open an account in the REGA register managed by Powernext to buy/trade these guarantees.
If you want to offer green energy plans to your customers, you will need to create an account in the Guarantees of Origin (GO) register managed by Powernext. This account will allow you to purchase GOs and cancel them to prove the renewable origin of the electricity supplied.
If you want your consumers to benefit from the ARENH mechanism, you will need to file an identification declaration with the CRE and then conclude an ARENH framework agreement with EDF.
Timeline des démarches administratives en nombre de mois
IT & electricity buying
Setting up a robust IT system that enables the retrieval of necessary data for billing customers (meter readings, location, subscribed power, etc.) and communication with Enedis (switch requests, requests to change subscribed power, etc.) is essential. Data exchanges are conducted through SGE, Enedis' data exchange platform. There are several providers of dedicated software solutions. These companies offer relatively turnkey solutions with varying pricing. The choice between providers depends on your budget and the number of sites you plan to manage in the short or medium term.
SGE et échange de flux
In order to operate, a supplier must have access to a balancing perimeter where the electricity purchased from markets or producers and that consumed by its customers will be accounted for. The supplier can choose to create their own perimeter with RTE or contract with an existing balancing responsible party (such as Augmented Energy) to add transactions/customers to their perimeter, thus outsourcing the responsibility for any imbalance between purchases and consumption to a third-party company.
In this latter case, the third-party balancing responsibility contract will be required when applying for the supply authorization, and various details about it will need to be provided when signing the GRD-F contract in order to declare it. The supplier's new customers will then automatically be added to the balancing responsible party's perimeter.
Most balancing responsibility offers also include the option to purchase the necessary electricity from the same counterparty rather than directly from the markets, with the balancing responsible party acting as access to the wholesale market. Having direct access to the wholesale market is not recommended at first due to significant fixed costs. Several purchasing options may exist, more or less sophisticated, depending on the supplier's needs/capabilities and the transfer of certain financial risks.
Electricity procurement is, of course, a crucial aspect of a supplier's business, but doing it internally from the start requires significant resources (hiring one or two people, membership fees for exchanges, etc.). It is preferable to fully outsource energy procurement until the portfolio reaches critical mass.
Augmented Energy offers a range of comprehensive solutions to assist new suppliers in their market operations. From upstream consulting to managing your electricity procurement and capacity guarantees, Augmented supports you throughout your project. Augmented Energy holds a Balancing Responsible contract with RTE.
For more information or any additional questions, please contact us at: sales@augmented.energy