France has a new president. Finally, Emmanuel Macron of the centrist European party “En Marche!” has been chosen to hold the new legislature over the next five years. In this new stage, we ask ourselves what will be the energy future of a country whose nuclear energy has a historical role in its generation mix and whose energy policies affect in a way our electric market?
France has two paths in terms of its energy model: 1) to continue the main role of nuclear energy in its generation mix or 2) to make a strong commitment to renewables. Macron’s energy agenda is clear regarding this aspects, it can be concluded that the second option will be chosen. A clear commitment to renewables and a gradual elimination of nuclear dependency. In this blog we will describe what are the main points of your energy policy with the aim of clarifying what will be the energy transition France.
Renewable energy and energy efficiency
One of the fundamental pillars in the new French president’s energy agenda is his strong commitment to green energy. In this sense, Macron plans to invest in renewable development projects, with the aim of doubling wind and solar photovoltaic capacity by 2022. In addition, it aims to encourage private investment in this sense worth 30 million euros. Alongside this, it is determined to simplify bureaucratic procedures for the development of these technologies. The idea of the new French president is to enforce the so-called Law of Energy Transition, approved in July 2015 by Hollande. In this sense, it will be aimed at achieving a renewable share of 32% of final energy consumption and will continue the plan to reach 40% of electricity generation with clean sources by 2030.
Continuing with its environmental measures, Macron is in favor of what it has called the “integration of ecological cost” into the price of CO2 emissions. Thus, the new French president will continue with the plan to increase the tax on pollutant emissions to 100 € / tn by 2030. With respect to the Paris Agreement, its compliance will be a priority within its international agenda. In fact, Macron has stated that the EU should commercially penalize the signatory countries of the Agreement that do not comply with the agreed measures.
On the other hand, Macron is also in favor of energy efficiency policies. Thus, it is foreseen the investment in projects of investigation and development of Energy Storage and projects on “Smart Grids”. In addition, among its plans is to carry out an accelerated program of housing rehabilitation in the short term.
If there is one issue that the future French government has made clear is its policy on hydrocarbons. Macron is in favor of banning any gas or oil exploration.
Regarding the technique of gas extraction through hydraulic fracturing, the so-called fracking, its position is clear: prohibition of any further exploration. It should be noted that a moratorium on fracking in the country is currently in place. France has so far applied the precautionary principle to suspected contamination of groundwater due to this extraction technique. The same would apply to any oil search project. Under his mandate, no oil exploration license will be granted.
In addition, and in line with its clean energy policy, coal will not take place in its energy model. Thus, according to its energy program, all coal plants will close the closure in five years. This means that it will do it a year earlier than anticipated by the objective of the previous government, in 2023.
As for nuclear power, the major player in the French energy mix, as mentioned before, Macron will keep to the goal set out in the Energy Transition Law. Therefore, its objective will be to reduce the share of nuclear power from the current 75% to 50% by 2025. In this regard, it will condition all decisions regarding the renewal of nuclear power plants, their decommissioning or The launch of a new investment exclusively to the outcome of upcoming inspections of existing reactors. Many of them are planned for 2018. It is worth noting that in order to meet the 50% nuclear target by 2025, more than 25% of the total electricity production that is currently of nuclear origin will have to be produced by renewables in 2025, and as a consequence Several reactors will have to be dismantled by those dates.
Little by little, the support with which it has always counted on nuclear technology is fading, both politically and socially. Most political parties are failing to favor nuclear as a source of electricity generation due to the cost of post-Fukushima security improvements, delays and over costs in the construction of the new Flamanville 3 reactor in Normandy, in addition to the high Cost of replacing plants that will soon reach their useful life. With regard to public opinion, 53% of the French would agree with a progressive elimination of nuclear energy in the country. Therefore, it seems that there will be too many impediments to a gradual transition from a lesser weight of nuclear to the energy mix of France.
Undoubtedly, this new government represents the continuity to be more renewable and less nuclear for the French. We must pay attention to how this energy transition takes place in France. Everything indicates that their plans will not find too many difficulties when implementing.
If they really want to meet the renewable quota targets mentioned above, we will not take long to see closures of nuclear power plants in the neighboring country. This fact could impact on our electricity market, specifically in prices in both the spot market and the forward market. We have already witnessed atypically high spot prices in the first months of this year, when several reactors had to be stopped forcing Spain to export electricity to France for a long period of time.
Enrique Battistini | Energy Consultant