France to introduce unprecedented measures to cushion energy crisis

Europe is in a major energy crisis, and is also lacking the right measures for bringing the high prices of gas and electricity back to reasonable levels. But the French government, according to experts, has made an unprecedented move to have as many new power plants as possible up and running in the shortest possible time.

French 1-year forward electricity prices have hit intraday highs of EUR 800 per MWh, a stunning increase compared to the average of about EUR 80 in the period until the end of 2021. Until recently, the country was a power exporter, but this year it has been importing electricity.

Many of the country’s 56 nuclear power plants, covering 70% of domestic consumption, were offline due to technical problems and maintenance, so their output this year will be the lowest in three decades.

The construction of solar power plants and wind farms with a capacity of 11-13 GW is at risk

Renewable energy sources are seen as a solution, but, according to WindEurope, inflation and higher commodity costs are putting certain renewable energy investments at risk. The French government estimates that 5-6 GW of wind projects and 6-7 GW of solar projects may not go ahead because of the current economic environment, the wind industry organization warned.

The government has therefore announced several emergency measures. One of them is to allow new wind and solar farms to sell their electricity directly on the market for 18 months before locking in their CfDs. The measure could increase investors’ earnings tenfold compared to the CfD model.

The government also intends to allow projects that have already won an auction to increase their capacity by up to 40% before completion.

Hirth: the best option is to build as many renewable energy power plants as possible

“Bravo,” said Lion Hirth, professor of energy policy at Berlin’s Hertie School and director at Neon. “We all should spend more time thinking about getting MWs on the ground than on how to manipulate wholesale prices in order to take away rents from power generators,” he added.

Hirth stresses that Europe is heading into a major electricity crisis, and points out that the most important thing to do now is to mobilize every single MW of generation capacity that does not burn natural gas.

“To give you an idea of the urgency (and the financial reward): one additional GW of dispatchable capacity has an economic value of more than EUR 4 billion in Germany and more than EUR 5 billion in France – in just one single year,” he explained.

Hirth also said that a lot of investments that don’t make much sense in general do make a lot of sense right now. It is critical to make them happen fast, he stressed, adding that in many ways, quickly getting much more renewables is the best option.

Tardieu: measures that no one has introduced so far

Commenting on the French government’s measures, Pierre Tardieu, WindEurope Chief Policy Officer, said that France is taking unprecedented steps to boost wind power generation and deal with the ongoing energy crisis.

“The wind sector is ready and fully committed to play its part in securing France’s and Europe’s energy supply. The government’s emergency measures mean more electricity generation in the coming months, and more energy security for French businesses and citizens,” said Tardieu.

Of note, France now produces 20% of its electricity from renewable sources, of which wind provides 8%. Nuclear power plants have a combined capacity of 61 GW, hydropower plants 26 GW, wind farms 19 GW, thermal plants 18 GW, and solar facilities 13 GW.

France plans to increase solar power capacity to 100 GW by 2050, and to install offshore wind farms with a total capacity of 40 GW.