French industrial power consumption growth in recent years has been below the government's expectations, according to junior energy minister Olga Givernet.
France has a target to cut by half its greenhouse gas emissions from the industrial sector by 2030. The electrification of industrial processes that formerly used fossil fuels is one of the main levers the government plans to use to reach its target, implying that power demand should increase in the coming years.
But demand in the sector has not picked up, Givernet told Argus at the launch of the government's energy sobriety campaign in Paris on 21 October, with existing industry being dependent on fossil fuels for heat in particular.
Electricity consumption — across the residential, tertiary and industrial sectors — has fallen sharply since 2022 because of what the government described as a mix of price effects and voluntary sobriety efforts by households and businesses.
And consumption on the high-voltage network — mostly from large industrial sites linked directly to the transmission network — has held roughly flat since moving down in mid-2022 (see demand graph).
These reductions have enabled the power system to regain margins that could accommodate demand growth, particularly if this is flexible, according to transmission system operator (TSO) RTE. Flexible growth could enable the country to soak up otherwise unusable electricity produced in periods of high renewables output. France on 20 October curtailed 15GWh of zero-carbon electricity, including solar energy, because of a lack of demand, the TSO said (see solar and wind graph).
While the government cited a "dependency" on fossil fuels as the reason for the lack of a jump in power consumption, poor industrial performance could be another cause. Manufacturing production has stagnated in recent years, with output hovering at 100-103pc of the 2021 average so far this year.
And output in energy-intensive sectors is far lower than three years ago. The paper, chemicals, glass and steel sectors have seen their production fall to 75-89pc of 2021 values so far this year, according to national statistics agency Insee. Gas demand in these four sectors held below 2015-22 levels in May-July, the latest data available, although this represented a slight rise on the record lows of 2023.
Meanwhile, gas consumption by all large industrial consumers connected to the transmission network in August fell to its lowest of any month since at least 2007.
Retail electricity prices for French businesses — including network costs and taxes, except value-added tax — were very nearly in line with the EU average of about €200/MWh last year, according to government data. And lower wholesale prices than European neighbours along the curve could provide some incentive for higher uptake of electrification. Calendar-year contracts delivering in 2025-27 were priced at €13.65-17.75/MWh below Germany on 21 October.
But at the same time, the government, caught in a budget crisis and intent on slimming its deficit, has put forward an increase in taxes paid by electricity consumers. The exact amount of the increase has yet to be set, but for industry it could come to roughly €5-25/MWh, which could cancel out any decline in retail prices from lower wholesale costs.
The government hopes that nuclear power supply contracts, or CAPNs, long-term contracts signed between industrial consumers and French state-controlled utility EdF, will encourage greater consumption. But low market prices have limited the attractiveness of the contracts to consumers, Givernet said, and getting more signed will require "an effort" on the part of both EdF and industrial firms.
