France’s Ambitious Ecological Plan: Regaining Control over Electricity Prices

France’s Ambitious Ecological Plan: Regaining Control over Electricity Prices

Macron’s Ecological Vision

French President, Emmanuel Macron, has outlined an ambitious ecological plan that includes regaining control over electricity prices at both French and European levels by the end of the year. As part of the government’s ecological planning measures, this move is intended to make electricity prices more affordable and predictable for households and industries. This is a crucial step in the country’s electrification strategy, as cheap electricity is a key driver for the energy transition.

Increasing Electric Vehicles and Heat Pumps Production

In a bid to accelerate the country’s move towards a greener future, Macron plans to produce a million electric vehicles and a million heat pumps in France by 2027, which is triple the current number. Additionally, €700 million will be invested in the construction of 13 metropolitan RERs. The government also plans to accelerate decarbonisation of the 50 most polluting industrial sites and reduce their emissions by 45% by 2030.

Role of Industries in Electrification

Xavier Barbaro, CEO of Neoen, highlighted the significant role that industries play in electrification. He, however, criticized the French administrative system for delaying renewable energy projects, particularly solar energy, which are crucial as nuclear reactors are not expected to be operational until after 2035. Barbaro emphasized that the costs associated with nuclear power are difficult to determine due to the long-term nature of the projects.

Dispute over Electricity Pricing

The French government and the French electric utility company, EDF, are currently at odds over electricity pricing. The EDF CEO, Luc Rémont, has been given a 15-day deadline to set the lowest possible average electricity price. The final decision is expected in early October.

Potential Reform of European Energy Market

The term “control over our electricity prices” at French and European levels could have different interpretations. At the national level, the state could impose a selling price. At the European level, it could mean a reform of the current operation of the European energy market, which works based on the principle of marginal cost pricing.

Controlling Prices through Nuclear Rent

One option considered by the government to control prices is to introduce a mandatory levy on some of EDF’s profits, known as the “nuclear rent”, which would then be fully redistributed to households and businesses. This would involve using the “contract for difference” tariff, guaranteeing a producer’s remuneration and a competitive price for consumers. This comes after the French Minister of Economy and Finance, Bruno Le Maire, indicated that the regulated selling price would not increase by more than 10% in February, extending the price shield.