After months of negotiations, the French authorities and state-owned utility EDF reached an settlement on Tuesday (14 November) to control the promoting value of nuclear energy at a mean of €70 per Megawatt-hour, with a “lease seize mechanism” making use of when costs rise above €78-€80/MWh.
Learn the unique French article right here.
“EDF is getting into the twenty first century,” French Economic system Minister Bruno Le Maire stated at a press convention to announce the deal on Tuesday (14 November).
The settlement follows declarations made in September by French President Emmanuel Macron that he needed to “regain management of electrical energy costs” by the tip of the yr.
EU nations have seen their electrical energy costs soar following the outbreak of struggle in Ukraine final yr, and France was no exception.
In mid-October, EU nations reached a frequent place on a proposal to reform the EU electrical energy market to tame risky electrical energy costs and promote long-term contracts between vitality operators and customers.
They’re now evaluating their place with that of the European Parliament to conclude negotiations by the tip of the yr.
For its half, France needed to take an extra step in direction of regulating its nuclear manufacturing – not solely to satisfy Macron’s political aim but additionally to switch its present ARENH system, which controls the value of nuclear electrical energy bought by EDF to its opponents.
Launched in 2011 to adjust to the EU’s vitality market liberalisation directives, ARENH has been a thorn within the aspect of EDF as a result of it obliges EDF to promote its historic nuclear manufacturing to opponents at €42 per MWh, properly under the corporate’s estimated manufacturing prices of €60/MWh.
With the ARENH system expiring on 31 December 2025, the federal government and EDF have entered negotiations to switch the scheme and reached an settlement on Tuesday (14 November).
Regulating nuclear
Underneath the settlement, a primary stage of regulation can be launched when costs within the European electrical energy market exceed €78 to €80/MWh.
Based on the settlement, something bought above this value can be redistributed to finish customers by way of their suppliers at a price of fifty% of the income generated by the turbines.
If the gross sales value exceeds €110/MWh, 90% of the income can be redistributed.
Nevertheless, in comparison with the present ARENH system, which solely covers half of France’s nuclear manufacturing or 100-120 TWh, the federal government says the brand new settlement will cowl all of it, amounting solution to 30 below-market and even 400 TWh by 2030-2035.
The deal gives “an incentive [for companies] to barter long-term contracts with EDF and different suppliers”, Power Transition Minister Agnès Pannier-Runacher stated of the reform that can take over the ARENH system from 1 January 2026.
Lengthy negotiations
EDF’s CEO, Luc Rémont, was initially reluctant to control its nuclear manufacturing, placing him at odds with France’s place in its negotiations with Brussels to reform the bloc’s electrical energy market guidelines.
Rémont and the federal government finally agreed on regulating a few of EDF’s manufacturing, though the extent of regulation has but to be outlined.
EDF didn’t wish to go under €110/MWh, whereas the federal government needed it to be round €70/MWh – which, in response to Pannier-Runacher’s workplace, is barely greater than the whole price of nuclear energy plus the price of financing new nuclear energy, together with the price of decommissioning and waste administration, as calculated by the French vitality regulator.
This value is finally the results of “long-term forecasts of value formation over 15 years beginning in 2026,” Rémont stated at Tuesday’s press convention.
“The sample we’re getting into favours the long run, which by its very nature is far nearer to our financial manufacturing situations and far much less susceptible to volatility,” he added.
In step with EU-level agreements
“This settlement is consistent with the settlement reached at European stage,” stated Pannier-Runacher.
Nevertheless, it’s doable that France is not going to have to make use of the long-term regulatory contracts supplied for within the EU reform regardless of having insisted that they might cowl present nuclear installations.
Based on Rémont, the primary level is to open up a “toolbox” with out utilizing all of the regulatory devices obtainable.
Le Maire additionally identified that the settlement between EDF and the federal government had been “outlined to adjust to European guidelines,” Pannier-Runacher’s workplace confirmed that discussions have already begun with the EU Fee.
The common value of €70/MWh is prone to change, as are the thresholds, the federal government stated – echoing the settlement that the events will meet each six months to debate the necessity for adjustments.
The present settlement will now be put out for session with shopper teams, suppliers, and producers.
[Edited by Frédéric Simon]
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