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France considers revising regulated nuclear electricity tariff

The French government has agreed to reassess the ARENH (Accès régulé à l'électricité nucléaire historique, 2010) mechanism, which obliges EDF to sell part of its nuclear generation (up to 100 TWh/year, i.e. around a quarter of its production) to alternative suppliers on the wholesale market at a regulated price (“ARENH price”), which has been set by the CRE at €42/MWh since 2012. This level is lower than the average electricity price on European wholesale markets (around €47/MWh) and requests from alternative suppliers for 2020 rose by more than 10% in December 2019 (to 147 TWh).

The new ARENH would force EDF to sell almost its entire nuclear power generation (around 360 TWh) at a guaranteed price with a range of around €6 (cap and floor). EDF would sell its nuclear production on the European market and the "nuclear price" would be set ex-post, as an average of the market prices weighted by volumes sold to electricity suppliers. EDF would receive a premium if market prices are lower than the floor price but would have to reimburse part of the price if market prices exceed the ceiling.

These stable revenues would help EDF invest in its major nuclear fleet maintenance programme ("Grand Carénage"), estimated by EDF at €51bn over a ten-year period. The ARENH mechanism is due to expire on 1 January 2026. 

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