The European Commission tabled the electricity market reform proposal in March 2023 to contain rising power prices caused by the Ukraine war and decreased supplies of Russian gas.
But what was supposed to be a quick process has ended in debates about state aid for power generators.
Paris wants to apply two-way Contracts for Difference (CfDs) to finance the lifetime extension of its 56 existing nuclear reactors as part of the reform, in line with the European Commission’s original proposal.
That move is resisted by EU countries like Germany and Spain, who are engaged in a transition to 100% renewable electricity and fear it will give French industrialists an unfair competitive edge by opening the floodgates to abundant, cheap nuclear power.
Regarding matters, EU presidency holder Spain presented a new compromise proposal on Wednesday (11 October) that completely removed the possibility of financing the repowering of existing plants with CfDs, while France and Germany have been holding talks on the matter for the past few days.
At the same time, the French government is engaged in a tug-of-war with EDF, whose CEO, Luc Rémont, also does not want CfDs for existing nuclear plants.
Cornered, French President Emmanuel Macron announced on 25 September that his government would “take back control of electricity prices” before the end of the year, whatever the outcome of negotiations in Brussels and Paris may be.
This is what the far-right Rassemblement National “has been asking for months”, its leader, Marine Le Pen, said the following day in reaction to Macron’s declarations about “price controls”.
France’s electricity sector, meanwhile, is on tenterhooks.
“If the negotiations with EDF and the member states don’t work, the President will be in a political impasse”, warns a sector representative.
France ups the pressure
Even before Macron’s comments, Energy Transition Minister Agnès Pannier-Runacher had prepared the ground with a threat.
If France’s demands go unheeded, “we will not hesitate to secure in our national legislation what we are proposing in Europe,” she said back in August.
In other words, “France is putting pressure on the other member states by saying ‘you are blocking, we are moving forward’,” Andreas Rüdinger, a researcher on energy transition at the Institute for Sustainable Development and International Relations (IDDRI), told Euractiv France.
However, the French government is taking two risks by threatening to go it alone.
The first is legal since “there has been no in-depth analysis of the legal compatibility with European law, nor any impact assessment of a national regulatory solution”, says Rüdinger.
He warns that The French executive has yet to guarantee that the European Commission will validate electricity price regulation at the national level.
In this situation, “the government cannot let Brussels off the hook on CfDs for existing nuclear plants,” says Phuc-Vinh Nguyen, an energy policy researcher at the European think-tank Institut Jacques Delors.
Then there is the political risk, as the European elections are approaching in June 2024.
“If the government gives the impression that it has caved in on electricity price regulation, it’s going to be very difficult to defend its record afterwards,” says Nguyen.
According to him, Macron’s image will be tarnished if he appears to bow to Brussels’ orders, putting him in a weaker position to oppose those on the far-right arguing in favour of leaving the EU electricity market.
“This debate [on energy] will have a huge impact on the European elections,” says Rüdinger.
“Inability to defend the interests of the French”
In France, Le Pen’s far-right Rassemblement National launched an attack against the government’s reform plans during a debate in Parliament on Thursday (12 October).
According to RN lawmaker Alexandre Loubet, the government has been “submissive” to European demands, with the consequence of keeping electricity prices high.
“Press articles are multiplying about the government’s inability to defend the interests of the French. Press articles are multiplying about your [the government’s] inability to negotiate in Brussels,” he said.
As a result, “in a year’s time, the French will punish you,” he warned, predicting that the European elections will be a failure for Macron’s party in the European Parliament.
According to Rüdinger, the government “knows that it must politically assert France’s sovereignty while proving that binary solutions, such as leaving the European electricity market, are not the right ones”.
“Emmanuel Macron is already treading on the toes of the extremes by using sovereignist terms such as ‘taking back control of electricity prices’, which remind us of ‘take back control’, the Brexit slogan,” he added.