WORKING PAPER
When Curtailment Pays: CfD Negative Price Clauses and
Intraday Market Dynamics in France
Mathieu RICHARD and Boris SOLIER
Renewable generation and intraday market development have expanded in parallel, with the latter providing a key platform for managing forecast errors from the former. This paper broadens the role of renewables in shaping intraday market dynamics by examining how short-term production incentives created by Contracts for Difference (CfD) influence intraday trading behavior. Focusing on negative-price clauses in generation-based CfDs, we use panel econometric models to assess their effects on intraday prices and traded volumes in France. Our results show that intraday prices efficiently reflect balancing needs arising from renewable forecast errors. However, relative to CfD payments, producers adopt either selling or buying positions depending on whether day-ahead prices are zero or slightly negative, revealing the all-or-nothing incentive embedded in the CfD design. These bidding responses affect the broader intraday market through both prices and volumes, weakening the alignment between production incentives and system balancing needs. By showing how support-scheme incentives propagate beyond individual producers to affect overall market outcomes, the paper highlights the need for reconsidering CfD design and discusses potential reform options.