A floor price, a ceiling price, intermediate thresholds, a rent capture mechanism… We have to hold on tight to try to understand the new mechanism for regulating electricity prices which must come into force in France from of 2026, if we judge by the agreement signed between the State and EDF, announced Tuesday November 14. Especially since many gray areas remain.
Replace the Arenh
The new mechanism is intended to replace the Arenh system (for “regulated access to historic nuclear electricity”) put in place in 2011 and which ends at the end of 2025. It required EDF to cede 100 TWh (at the time a quarter of its nuclear production) to its competitors at a very low price, €42/MWh.
Negotiations between the electrician and its sole shareholder, since the renationalization of the company, lasted several months. It was necessary to agree on an electricity price that would be high enough to get EDF out of its current financial asphyxiation (65 billion euros in debt) and low enough not to weigh down the accounts of households and businesses.
“The states that have a competitive electricity price will be the big winners in the global economy in the 21st century,” says Bruno Le Maire. For its part, EDF estimates its rate of investment in the coming years at 25 billion euros per year (compared to 16.4 billion in 2022), including the construction of new reactors.
All of EDF’s nuclear production is affected
For great needs, great means. From 2026, all of EDF’s nuclear production will be included in the new regulatory framework, and the average reference price of electricity will be around €70 per MWh.
If prices on the market exceed €78-80 per MWh, 50% of the proceeds from the sale by EDF of its nuclear electricity beyond this threshold will be taken back by the State and “automatically redistributed directly to the consumer”, a explained Agnès Pannier-Runacher, the Minister of Energy Transition.
If prices rise above €110/MWh, “the capture of the rent will be 90%”, according to her. However, the details of the system remain to be clarified. “For consumers, regularization could be done every year, and every month between EDF and the State, but nothing has yet been decided,” we assure at Bercy.
But the government’s objective is for the mechanism to change as little as possible for the French. The regulated sales tariff (TRV) will thus be maintained for households and even extended to all small businesses which were not entitled to it until now, if the power of their meter exceeds 36 kVA.
Disappointment on the business side
France will thus be equipped with “an anti-crisis mechanism to avoid a price explosion similar to that of 2022”, underlines the Minister of Energy Transition, recalling that it also aims to disconnect the price of energy. electricity from the price of fossil fuels, as is the case today. Bruno Le Maire, for his part, wants to highlight “price stability” which will, according to him, be “guaranteed”.
On the business side, the government announcements were received rather coolly. “It’s a big step backwards. The device is too complex and does not provide visibility. In the end, companies will pay an average price well above €70/MWh,” regrets Frank Roubanovitch, president of Cleee, an association bringing together major gas and electricity consumers.
Increase expected for households
The government will also have to show a lot of persuasion to convince households that electricity prices will not increase, going from an Arenh price of €42/MWh to a reference price of €70/ MWh.
“The level of the Arenh is not the only component of the bill. All inclusive (that is to say with taxes and transport, Editor’s note), we are today at €257/MWh,” explains Bruno Le Maire’s entourage. Electricity of nuclear origin also represents only 55 to 70% of French production, depending on the availability of power plants.
Thanks to the tariff shield, put in place in 2022 and which will have cost 40 billion euros, the French have already benefited from cheaper electricity than that paid by their neighbors. But there have also been a lot of increases. Between February 2022 and 2023, the regulated sales price was increased by 29%, and a further increase is expected next February. “Given the first elements provided, this new system could lead to an increase in the TRV of 10%,” estimates Sylvain Le Falher, president of the consulting company Hello Watt.
The priority for EDF is to increase its production
The text will now be sent for consultation to all players in the sector. It will also be sent to the European Commission, even if a priori there should be no problems. During the last meeting of the European Energy Council in mid-October, France obtained the right, despite German opposition, to establish a price corridor for its nuclear electricity, as part of market reform. . “The big winner from this reform is EDF,” believes Emmanuel Sire, energy broker.
In the meantime, the CEO of EDF shows his satisfaction. “This is a historic agreement, which will allow us to offer both competitive prices to our customers and to finance our investments,” assures Luc Rémont. But for the company, the key lies in its ability to increase its nuclear production, which fell to its lowest level last year at 279 TWh, due to technical problems. This year, it should be between 300 and 330 TWh. “It is also an empowering and demanding agreement,” recognizes Luc Rémont. The priority for the group is to regain the 400 TWh produced at the start of the 2010s.
EDF’s nuclear fleet
In France, EDF’s nuclear fleet is made up of 56 reactors (since the closure of the two Fessenheim power plants) with an installed capacity of 61.37 GW.
The Flamanville EPR (1.6 GW), whose construction site has experienced numerous setbacks, must enter service next year.
The group will embark on the construction of a new reactor program, EPR2. Initially, six are planned. The first pair should see the light of day in Penly (Seine-Maritime), but not before 2035.
It is also engaged in a program to extend the lifespan of the existing fleet, probably up to sixty years, unless otherwise advised by the Nuclear Safety Authority (ASN).