French power sector braces for change ahead of election

The outcome of the French parliamentary election on Sunday could bring reforms that will impact the country's power industry, causing mixed reactions among market participants.

The far-right National Rally (RN) and its allies gathered 33pc of votes in the first round of the French legislative election on 30 June, placing it ahead of the coalition of left-wing parties, the New Popular Front (NFP), and the current government's Ensemble coalition. But energy agendas strongly differ across the three political groups, creating a climate of uncertainty in the French power sector, especially as those programmes were put together in a rush after Emmanuel Macron called a surprise snap election, and they will probably need some fine-tuning.

Divide over the renewable line

On the topic of wind farms, the RN has reiterated its proposal to halt the construction of new wind projects, which could put at risk the achievement of French renewable targets.

Despite the halt of new projects, RN leader Jordan Bardella in the party's last press conference said he does not plan to "stop all variable sources of energy", adding that wind farms currently in operation would not be dismantled. He also mentioned an ambition to "recreate a French solar PV [photovoltaic] industry" and to protect it by raising tariffs on the European level. But the party did not respond to Argus on the specifics of its programme.

The NFP intends to develop both offshore wind and tidal energy, and has called for a vote on an "energy and climate law". And the current government has raised solar PV targets in its updated national energy and climate plan (NECP), in addition to raising the offshore wind goal to 45GW by 2050.

"The pressure on public support mechanisms for renewable development would depend on the next majority in parliament," director of power and PPA advisory at consultancy firm Greensolver, Alexandre Soroko, told Argus. "It could change the way in which renewable energy projects under development generate their revenues and finance their development. If the pressure is increased, it would probably have a bigger impact on wind projects than on solar PV ones."

Other market participants told Argus they expect delays in permitting processes if RN wins the election. Parliament last year passed the "renewable acceleration law", to speed up permitting processes that are longer in France than in neighbouring countries.

A boost to nuclear energy

The RN plans to strengthen the French nuclear fleet with a massive investment programme, making it the pillar of the French energy mix, while NFP's position is not clear on the matter.

RN aims to increase French nuclear capacity through the construction of European pressurised reactors (EPRs) paired with small modular reactors (SMRs) and fast-neutron reactors.

This plan echoes Emmanuel Macron's recent pledge to build 14 EPRs of type 2 reactors by 2050, with three pairs already planned. In contrast, the topic of nuclear reactor construction has been absent from the NFP's programme as views on it diverge among participants in the union, mostly between green party Les Ecologistes, which has been traditionally against nuclear energy, and the communist faction.

An exit of the European power market?

Criticising the rules of the European power market has been a recurring discourse on the French political scene.

Bardella said he wanted a "French power price, that corresponds to the costs of nuclear production", while far left La France Insoumise (LFI), which is part of the NFP group, opposed the EU power market design reform in April.

During the Europ'Energies conference this week, energy consumers association CLEEE's president Frank Roubanovitch said he was "favourable to the idea supported by RN and LFI of ending the marginal pricing mechanism while maintaining physical interconnections". But an exit of the European market would mean a "not optimal use of transmission infrastructure", according to European Commission team leader on the internal energy market, Mathilde Lallemand.

Points of convergence

Nuclear power, a protection of current hydropower concessions and the conversion of coal-fired plants to biomass are topics that are found in both the RN and Ensemble agendas.

Although the RN plans to invest into hydropower plants to increase their production capacity, it is strongly opposed to the introduction of competition to the hydropower concessions system. The latter was mentioned in the draft energy sovereignty proposal unveiled by the government in February, but was never introduced to parliament.

The RN party also wants to phase out coal and convert coal-fired plants to biomass — an ambition announced by Emmanuel Macron for 2027 at the end of 2023.

The second round of the elections is planned for 7 July.

By Tatiana Serova