French Energy Transition Key to Security - IEA

In its latest country review of energy policies, the International Energy Agency (IEA) praised France for setting in motion significant reforms towards more secure, affordable and sustainable energy supplies and the green growth of its economy.

Over the past ten years the French economy has reduced its carbon intensity and benefitted from greater energy efficiency, notably in the residential sector, according to the IEA report, Energy Policies of IEA Countries: France 2016 Review. The IEA praised France's leadership role in climate change mitigation and green finance around the world and at home, particularly thanks to the adoption of the ambitious set of measures under the Energy Transition for Green Growth Act in 2015.

But the IEA found that the government's plan to cut the share of nuclear power from 78% of electricity produced today to 50% by 2025, while also reducing greenhouse gas emissions by 40% in 2030, will require significant investments in energy efficiency and new low-carbon generation.

"France has to implement nothing less than a transformation of its energy system and power market," said Paul Simons, the IEA Deputy Executive Director, speaking at the launch of the report in Paris. "France's Transition Act is a first-class energy and climate framework, based on a low-carbon strategy, carbon budgets, and the related investment planning. France leads on carbon pricing with a long-term carbon price trajectory set by law up to 2030."

France's ambitious goal of reducing its share of nuclear power over the next decade amid an ageing fleet is going to transform its energy sector. Reaching the target will require careful policy guidance, effective markets and strong measures for renewables and energy efficiency, according to the IEA's latest review of France's energy policies.

The report outlines that the outlook for France's nuclear sector in the next ten years will be decisive for the country's capacity to meet its climate and energy goals, and - at the same time -- maintain electricity security. France's nuclear fleet is the world's second-largest, and has reached a 30-year average lifetime. For now, no decision has been taken in favour of long-term operation pending safety reviews.

The IEA report highlights five avenues to accelerate the energy transition and guide energy investment: it encourages the government to track progress along robust scenarios, to continue with clear and long-term carbon pricing instruments, to take timely decisions on the safe and long-term operation of the nuclear reactors, to further reduce barriers to renewable deployment and to strengthen efforts towards market opening, competition and consumer choice.

The IEA shows that deployment of renewable energy in France is still below the IEA average. While solar and biomass are developing well, further government action could help improve siting, permitting, acceptance and grid connection of wind power. Despite recent reforms, price signals from the electricity and carbon markets are weak and technical and market barriers remain for further renewable deployment.

The IEA acknowledges France's progress in gas market reforms, with higher trade and regional integration. But despite reforms of the electricity market, including dropping regulated tariffs for large and mid-sized consumers, and ensuring competitive regulated access to the nuclear fleet, France's electricity sector has only a few large players.

Commendably, the government has decided to encourage demand response, to launch capacity mechanism and set investment targets under the multi-annual energy planning (PPE). When implementing these significant measures, the government needs to remain vigilant of competition and electricity supply security, notably during times when winter peak demand coincides with low nuclear availability.