Understanding the dynamics of the French intraday market: insights on the roles of balancing needs and flexibility

Intraday markets are gaining importance in Europe, particularly in the context of renewable energy deployment and the harmonization of balancing models. France is no stranger to this dynamic, having experienced a surge in intraday market size, with total trading volumes nearly doubling between 2021 and 2024. This paper aims to study the intraday dynamics in France with regard to three dimensions. Through econometric modelling, we assess how traded volume, price level, and price volatility are influenced by balancing adjustment needs and short-term flexibility availability. In particular, the role of forecast error from renewables production located in France or abroad is assessed. Building on the methodology proposed by Soysal et al. (2017), we can disentangle the effect on market dynamics of positive and negative forecast error. Preliminary results, focusing on hourly products from the continuous market, illustrate the balancing role of the intraday market. Forecast errors tend to increase traded volumes, and this effect is even more pronounced when there is a production deficit to adjust, for both solar and wind technologies. Forecast errors also impact the intraday market price, with positive errors resulting in a bearish effect and negative errors having a bullish effect. Initial estimates on price volatility suggest a stabilizing effect of cross-border trading. Finally, we provide a discussion on the policy and economic implications of these findings.