France opens consultations on new energy policy and power market reform

The French government has launched a public consultation on its new strategy for energy and climate, which aim to makes the country’s energy system fossil free by 2050. Indeed, France’s final energy consumption is expected to decline by 2%/year over 2021-2050 (-44%) to 900 TWh, with 56% of carbon-free electricity, 41% of renewables (excluding electricity) and 3% of hydrogen and e-fuel. Under this trajectory, power generation is expected to increase by 55% over the 2021-2050 period to meet the rising electricity demand caused by a reindustrialisation of the French economy. 

In addition, the government has opened another consultation on a new regulation for nuclear electricity replacing the Arenh scheme, which would be based, on the one hand, on the implementation of the long-term commercial policy envisioned by EDF, and on the other hand, complemented by an economic regulation of existing nuclear plants. This new organisation aims to encourage the development of medium to long-term contracts between market actors, negotiated on wholesale markets and tailored to consumers' needs. These contracts would be accompanied by price controls to protect consumers in situations of high prices with a rent-capture mechanism. 

EDF's proposed commercial policy includes the development of market contracts with a 4-5 year horizon and establishing industrial partnership contracts. The objective pursued is to guarantee access to the entire nuclear production over the next 15 years for all consumers at a price around €70/MWh, compatible with the comprehensive cost assessments of the French Energy Regulatory Commission (CRE) and including the necessary investments by EDF.