Blog post

Swimming against the European tide: why French politicians are surprisingly hostile to renewable energy

Energy Blog, 16 June 2021

Despite, or maybe because of, being at the forefront of the nuclear energy revolution, France is now struggling to adapt to the transition to a renewable future. Jérôme Guillet discusses why.

There have been a number of stories recently underlining how Marine Le Pen’s Rassemblement National (RN) is actively supporting  anti-wind protests but what makes this interesting is that her compatriot Emmanuel Macron is also at best lukewarm about renewables, and the right wing Les Républicains are themselves vehemently anti-wind, as demonstrated by Xavier Bertrand, one of their putative leaders. This comes in the context of France’s protracted negotiations with the EU Commission about the restructuring of EDF, which is focused on preserving the existing nuclear fleet and more importantly EDF’s ability to invest in new nuclear plants without falling foul of competition rules (FT story – Reforming EDF shows messy political reality of energy transition). 

This ambivalence at best towards renewable energy first comes from the fact that France has been in the fortunate position of not having to face the reality of the energy transition as urgently. Up until now it had cheap, locally produced and largely carbon-free electricity thanks to its large-scale nuclear programme. Launched in the 70s, French nuclear power has benefitted from a fairly broad political consensus and is a good example of what can be done when technocrats get things right: good strategic decisions, strong implementation including the build-up of a national supply chain, and a well-coordinated unified grid and generation system. And, as a capital-intensive technology, funding by the State at sovereign rates brought down the cost of electricity massively and allowed to also gain along the way the support and loyalty of employees through multiple (and many have argued, excessive) perks. That “grand deal” between the State, the Grandes Ecoles-trained engineers and the communist voting workers has been a real success leading to 56 operational reactors supplying 70% plus of the country’s electricity demand (and generating substantial exports). However, this programme has been often misunderstood outside France, and in particular in Brussels, where the EU Commission, encouraged by the gas rich Brits, has been trying to break it up for the past 30 years. It looks like the successive attempts to impose more competition and diversity in the market is likely to finally succeed through the stalking horse of this latest recent restructuring of EDF (required by the need to invest massively as the nuclear fleet ages) and restrictions on State aid. Predictably, this latest turn of events has not been well received by French politicians or the nuclear industry.

A lot of the politics about energy in France have been defensive because the French nuclear model, despite its obvious success, has been under assault for a long time.

However, the politics is more complex than it would appear to the casual non-French observer and there are 3 distinct but interwoven strands of opposition to Brussels: (i) the government and the technocrats, who have tried to preserve the status quo (without necessarily understanding which parts of the model made its strength), (ii) left wing political parties, who have traditionally tried to defend the worker’s pay and perks being sacrificed in the cause of “efficiency” and market discipline and finally (iii) the nationalists who have made political hay of plucky France standing up to Brussels and the Brits on a topic where sovereignty matters, and where the French solution looks to be working better and more fairly for citizens.

Thus, both the success of – and Brussels’ assaults on – nuclear energy has polluted the debate on renewables in France. The initial French scepticism was not unreasonable (“France already has decarbonized electricity, and cheaply too, why should we build expensive new capacity?”) especially in the early days when renewable energy really was more expensive. This was compounded by less good faith arguments indirectly (and sometimes directly) promoted by EDF and Engie who, like other utilities, saw their existing assets threatened by the increasing penetration of renewables. In part this is a consequence of how the power market is structured, with spot prices used to balance the system. Renewables, which generate power at a marginal cost of zero, always substitute more expensive (in terms of marginal cost) generators.

EDF and Engie did not suffer as much as other utilities from this substitution effect but they did suffer from the trend towards lower spot prices caused by renewables because inevitably their nuclear plants – which as base load producers are price takers – received less money for the same production. In response to this threat, the nuclear industry echoed the usual plethora of anti-wind arguments (“it’s ugly”, “it’s expensive”, “it kills birds”, “it requires more backup”, “it requires rare metals”, “it’s owned by profiteering financial investors”, etc), with the additional, and stronger, argument that nuclear power was, until recently, actually cheaper. These arguments touched a nerve with the wider French population who felt that a real French industrial success story was being deliberately dismantled by uncaring (or profiteering) foreigners.

We can debate at length if nuclear really was cheaper, and how to account for long term waste storage costs (I personally believe that this was accounted for in EDF’s costs, even if the money was long ago captured by the French State) but it is an unavoidable reality that France has had sustained cheap power prices for more than 30 years. The argument that extending the French nuclear fleet was cheaper than building new renewables was, until recently, quite certainly true even if the real cost of new plants is much less certain, given the massive delays and/or cost overruns on Hinckley Point in the UK, Olkiluoto in Finland and Flamanville in France.  

Today, we face a new situation where it’s not just new nuclear which is no longer competitive, but even the much needed refurbishment of the existing nuclear plants in France (“le grand carénage“) is not likely to be cheaper than building new renewable capacity. EDF recently estimated that, after all planned renovations for the 2014-2025 period, the 50-year average real cost of its electricity would be 55 EUR/MWh. In contrast, the recent tenders for offshore wind have yielded a strike of 44 EUR/MWh. These prices directly threaten the industrial strategy of EDF which has tried to keep as much as possible of its nuclear fleet running. There is little awareness of that reality in France.

The other harsh reality is that, at scale, nuclear and renewables are not really compatible.

Both are low marginal cost, “must run” price takers and any flexibility in their use (as EDF has learnt to do with its fleet) damages their economics. The French nuclear fleet now runs at an average capacity factor of 75% and this is structurally less competitive than nuclear plants running at 95-100% capacity. More significantly, neither production profile is really adapted to power demand, which varies massively on a daily and yearly basis. Quasi–flat baseload generation profiles require a parallel flexible capacity (i.e. fossil fuel or hydro) to cope with demand patterns.

This is also true of renewables where the inherent and unavoidably intermittent nature of wind and solar requires a similar flexible complement but with a completely different net profile. Marrying nuclear and wind/solar generating capacity together makes both less cost effective and makes the resultant energy market mix much more complex to manage. It also leads to outcomes which reduce profitability and may deter investors. There are increasing periods of sustained negative prices when demand is low but both renewables and inflexible nuclear are supplying power with the latter preferring to pay to stay online rather than incur the costs of ramping production down and then up again. As the penetration of renewables increases, this will put an increasing burden on the economics of nuclear plants. Structurally there is thus an intrinsic incompatibility between nuclear and renewables when both are large, and in France, this is a fight to the death. Right or wrong on the substance, the French nuclear proponents have correctly identified renewables as an existential threat.

In this context, it is no small feat that the French renewable energy market has actually been quite stable over the past 20 years, with consistent >1GW installations of onshore wind and 0.5-1GW of solar PV per year over the last 10 years. However, this slowly increasing penetration has mostly displaced the residual fossil fuel capacity in France or taken advantage of the country’s extensive connections to neighbours whilst leaving the nuclear fleet largely untouched. But now the French have to make some hard decisions; to stick to the well-trodden nuclear path, with uncertain prospects (and the risk of massive bills and delays in building new capacity), or to switch to the renewable future? This is not an easy call for the French. Renewables is still historically associated with the Greens and there is decades of bad feeling with both the old-school technocrats who bear the scars of previous battles over nuclear plants long since built and the blue-collar unions who associate the Greens with a wider anti-industrial agenda. Neither party is likely to want to kiss and make up with renewables anytime soon.

So, even as the main players EDF, Engie and now Total increasingly invest in renewable capacity across the world, the political debate in France seems frozen in time, stuck in a 1980s paradigm when the country could sneer at its coal-burning neighbours trying to lecture it about carbon emissions, and when renewables were still in their infancy, economically speaking. It is highly symbolic that the two leading contenders for next year’s presidential election, proponents and symbols of very opposed political views (to simplify, the liberal globalists vs the nationalist/nativists) are on the same side of the energy debate in France, but it is a very worrying symbol, and one that foretells a serious crisis around the future of EDF and of electricity in France.

Jérôme Guillet co-founded Green Giraffe in 2010 and was a Managing Director until 2021.