France Energy Production Trends

How The Energy System Is Structured

In France, there are companies that produce and provide energy to consumers (e.g. ENGIE and EDF) and companies that are only providers but do not produce the energy (e.g. Planète Oui, which provides only renewable energy). As well, some companies are only dedicated to the production of renewable energy (e.g. JPee).

Despite the opening of the energy market in France in 2007, the two historical operators—EDF and ENGIE (ex-GDF), which were state-owned until 2006 (Law No 2006-1537 concerning the energy sector)—are still the main producers and providers of energy in France (EDF for nuclear energy and ENGIE for gas). Indeed, they both still represent 90% of market shares. The French government currently owns more than 30% of ENGIE’s capital and 85.3% of EDF’s capital.

Until 2016, if the renewable energy producers wanted access to state subsidies they needed to sell their electricity to EDF systematically. This was called the “purchase obligation” (obligation d’achat). Since the adoption of the Decree on additional remuneration (Décret n° 2016-682 du 27 mai 2016), it is possible for the producers to sell their renewable energy to other operators while at the same time preserving the possibility of receiving subsidies. This was an important step in giving other energy providers (like Planète OUI) the chance to more easily buy renewable energy from different sources. However, the bank guarantee has replaced the purchasing monopoly (i.e. obligation d´achat). We can therefore say that the French government is still willing to leave the development of renewable energy to EDF, which is the most important nuclear energy producer in the world. There is a certain contradiction in leaving the development of green energy to a company producing nuclear energy as 78% of its energy mix (58 nuclear power plants). The costs for shutting down nuclear power plants make the promotion of renewable energy and the energy transition in France quite difficult.

Ségolène Royal, President of COP21, entrusted Pascal Canfin (former Minister, Managing Director of WWF France), Alain Grandjean (co-founder and partner of Carbone 4), and Gérard Mestrallet (Chair of ENGIE) with the mission of developing a report for enhancing carbon pricing across the world. At a French level, the report includes a proposal to introduce a floor price of €30/tCO2 for national electricity production. This measure would lead to the closure of almost all coal-fired and gas-fired power plants, significantly increasing the risk of blackouts on the French power grid. In order to replace coal-fired power production with gas-fired production, while securing supplies and reducing greenhouse gas emissions, the report proposes two options at a French level:

• Establishing a regulatory standard based on greenhouse gas emissions from power plants; establishing a differential tax, the level of which would take account of the yield from thermal power plants. The aim of this would be to improve the general energy efficiency of all thermal power plants.
• Establishing a differential tax, the level of which would take account of the yield from thermal power plants. The aim of this would be to improve the general energy efficiency of all thermal power plants.

Sources of Energy

In 2014, the total consumption of primary energy in France was 257 Mtoe. This represents a reduction of 0.7% per year since 2005. Since 2000, the energy mix in France has been almost stable, with around 45% primary electricity (renewable and non-renewable), 47% fossil fuels (30% oil, 14% natural gas, and 4% coal), and 7% renewable thermal energy and recovered wastes. The total of renewable primary energy represents less than 10% of the energy mix with 24 Mtoe (seasonally adjusted data) (Source: Bilan de l’énergie, CGDD/MEDDE).

In France, after a drop of 3.8% in 2014, the consumption of primary energy increased by 1.6% in 2015 at 253.4 Mtoe. The main reason was the drop in temperature compared to 2014, a year with exceptionally mild temperatures. The national production of primary energy grew slightly to reach around 140 Mtoe. The balance was close to its 2015 level, but the energy bill reduced by 28% due to the drop of fossil energy prices. Below 40 billion euro, the energy bill reached its lowest level since 2004. In this context, the final energy consumption, seasonally adjusted, which dropped on average by 0.9% between 2008 and 2014, has been almost stable since 2015.

The figure below shows the total consumption in 2014 of final energy per energy type.

In 2012, nuclear power plants (58 in total) produced 75% of the net electricity production. The French electricity mix is made of 75% nuclear energy and only 15% renewable energy, and therefore 90% non-fossil, non-CO2-emitting energy. Thermal, fossil, and CO2-producing energy represents around 10% of the mix. However, if nuclear energy does not emit GHG, it raises other environmental issues and cannot be considered the only alternative to fossil energy. France being the second largest nuclear energy electricity producer in the world, the energy transition is very challenging in a country where the sector is highly subsidised.

The share of renewable energy in France in the final gross consumption of energy was 14.9% in 2015 and has been progressing regularly for the last 10 years. The important growth of renewable energy since 2005 (+48%) is mainly due to the development of biofuels, heat pumps and wind sector. The development of solar energy and solid biomass for heating also contributed to this growth, even if this practice was limited between 2014 and 2015 due to the extremely mild climate.

Currently, it seems very difficult for France to follow the targets adopted in the framework of the EU climate and energy package. France committed to having 23% of renewable energy in its final energy consumption in 2020, but currently it has only reached around 14% (14.9% in 2015). In the last European ranking established at the end of 2015 based on 2013 data, France ranked sixth, below the average of the 28 Member States (15%) and way behind the champions including Sweden (52.1%), Latvia (37.1%), Finland (36.8%), and Austria (32.6%). France has even dropped by three positions since 2010, surpassed by Italy and Greece.

Profiles of Leading Energy Companies

ENGIE: ENGIE is the first independent power producer in the world and operates in 70 countries. It has 117.1 gigawatts of installed power production capacity (2015). It has 228 urban networks for heating and cooling operating in 13 countries. The production-base energy sources are the following:

• 56.2% natural gas
• 18.3% renewable energy
• 12.8 % of coal energy
• 5.3 % of nuclear energy
• 7.4% other

As of December 31, 2015, the Company counted 2,435,285,011 shares with a par value of Euro 1. The figure below present the breakdown of ENGIE’s share capital. Only 32.76% of its capital is state-owned.

ENGIE has a board of directors and an executive committee. The board of directors defines the strategic guidelines and directions of the business, and the executive committee implements group strategies to succeed in the energy challenges of tomorrow. The board of directors is supported and informed by four committees with complementary areas of expertise:

• The Audit Committee
• The Strategy, Investment and Technology Committee
• The Nomination and Compensation Committee
• The Committee for Ethics, the Environment and Sustainable Development

The members of the ENGIE50 Operational Management Committee are:

• The members of the General Management Committee
• The 24 Business Unit CEOs
• The Heads of the 5 Métiers
• The Heads of the main Functional Divisions

ENGIE indicated in front of the French National Assembly that it is well aware of the role it has to play in combating climate change and has set itself a series of ambitious targets. It is now working to go even further and achieve a 10% reduction in CO2 emissions per kWh generated by 2020. It has also exceeded the goal it set itself by increasing our power generation capacity from renewables by 60% between 2009 and 2015, compared to its original target of 50%. ENGIE monitored the COP21 climate negotiations very closely, and has warmly welcomed the directions set in the Paris Agreement, especially the inclusion of a strong generalized carbon price signal as an encouragement to companies to invest in low-carbon technologies.

ENGIE made strong climate commitments, which include:

• The 2015 decision to halt all new coal-based projects
• The development of new offers tailored to the issues faced by individual regions
• The development of new gas solutions, such as biogas and the road and sea transportation of Green Natural Gas (GNG).

Aware of its responsibility and the major role it plays in the transition to a low-carbon economy, the Group has identified the actions needed to make the climate agreement targets a reality:

• Continuing to consolidate the key topics identified at COP21 and keep up the impetus on commitments (working alongside the World Bank, supporting European reforms, etc.)
• Strengthening initiatives to redirect funding towards investment that will deliver carbon reductions (Green Fund and access methods)
• Continuing to promote dialog between companies and governments, as is already the case with the Business Dialogue, in order to facilitate the introduction of a framework to encourage the rollout of low-carbon solutions
• Encouraging access to energy in developing countries—especially those in Africa—through the development of renewables

Planete Oui: Planete Oui was funded in 2007 when the energy market in France was liberalized. Planet OUI is currently the only French provider proposing an alternative solution for eco-labelled electricity. Since its creation, its objective for green growth fosters the reduction of energy consumption and supports the production of renewable energy. Planète OUI buys its electricity from different French and European renewable electricity producers. In order to guarantee the origin of its electricity, Planète OUI certifies its electricity procurements with origin guarantees issued by independent French or European producers which comply with the EU Directive 2009/28/CE. Currently, Planète OUI has around 30,000 clients. The policy of Planète OUI is to mobilize consumers who are often not sufficiently involved in the energy transition.

The figure below presents the energy mix of Planète Oui. The majority of the energy purchased by Planète OUI comes from hydraulic energy.

The graphic bellow shows the periodicity and the origin of Planète OUI’s energy mix in 2015.

The map below presents the partner production sites of Planète OUI.

The objective of Planète OUI in future months is to insert within this sourcing new and innovative energy production (e.g. hydroliennes bio mimétique from the company EEL Energie in partnership with the French Institute for research IFREMER).

Planète OUI commits to maintaining prices that are below or equal to regulated prices. With the Law NOME (new organisation of electricity market) and the Code of Energy on renewable electricity providers, consumers can take ownership of the development of these production that they finance through the CSPE (tax appearing on the electricity bill of all French consumers). In this way, Planète OUI makes accessible to its consumers their right to consume what they financed themselves. The basic price per KWh is between 0.1564 euro (all taxes included) and 0.1462 euro.

Planète OUI policy is in line with the French objective to reach 20% of renewable energy by 2020. It proposes a reduction of 20% on registration thanks to its services Electroécolo and Electréconso. 20% of the investments of Planète OUI are directly engaged towards the production of alternative energy and/or the development of free services to support energy control and efficiency. By only providing renewable energy to its clients, Planète OUI contributes to a low carbon footprint. The other impact of Planète OUI on the reduction of GHG emission is to make an offer to its clients to reduce their energy consumption by becoming the owner of their electricity bill. However, the reduction of GHG emission that this will generate is not yet measurable.

Planète OUI faces the difficulty of accessing renewable energy production which remains mainly in EDF’s hands, despite the opening of the market to competition and the end of the purchasing obligation.