2023-10-18 20:21:32
An important step was taken on Tuesday by the energy ministers of the twenty-seven for the redefinition of the electricity market in the Union.
Protect without helping. This is the subtle balance that was found on Tuesday by the Energy Ministers of the Twenty-Seven member countries of the European Union (EU), gathered in a last chance meeting aimed at defining the future functioning of the energy market. electricity within the Union. From a formal point of view, the ball is now in the European Parliament’s court with a first meeting set for this Thursday morning. The objective is to find common ground by the end of the year to set in stone the new operating rules of this market, the market design.
The text resulting from the Council should allow France to have an electricity price which “ reflects the production cost of its energy mix », Explained the Ministry of Energy Transition on Tuesday evening. Good news for French consumers, whether individuals or businesses. Thanks to its 56 nuclear reactors, ensuring around 70% of national electricity consumption, the country has relatively cheap electrons. Except that, until now, the wholesale price of electricity was not directly linked to the average production cost but to that of the last power station called to produce electricity. Or, in periods of high tension on the network, gas power stations. As long as the latter’s prices were low, this was not a problem. But with the war in Ukraine, gas prices soared, bringing electricity prices in their wake.
Read alsoElectricity: find the right supplier to limit future price increases in 2024
When the new “market design” comes into force, which may still be a matter of a few months, the electricity prices paid by consumers should reflect the production costs of the energy they use. That is for the French, two large thirds of nuclear, a small third of renewables and a few percent of fossils. No more yo-yoing on the price of electrons: the bill for households and businesses will be predictable and relatively stable. To ensure this correlation between production costs – low in France – and the amount of this invoice, two main mechanisms could be put in place. The first concerns large energy consumers, industrialists, distributors, and even energy suppliers. They will be able to sign long-term electricity purchase contracts (PPA) with producers – around fifteen years – guaranteeing them both a volume of electricity and a guaranteed price.
The second is a little more complex. It concerns the implementation of contracts for difference (CFD). Their possible application to the existing French nuclear fleet constitutes a real“political victory” For Paris. This mechanism is based on the signing of long-term contracts between public entities (the State) and an electricity producer. It can be EDF, but also an alternative producer with wind or solar capacities. CFDs are frequently used during the tender procedures of the Energy Regulatory Commission (CRE) for the allocation of new photovoltaic and wind farms. Their generalization to the existing nuclear fleet was recorded by Tuesday’s agreement. This is what could change everything for consumers.
“A political choice”
Indeed, in the context of a CFD, a strike price (strike price) of the megawatt hour is defined. When the wholesale electricity market booms, the difference perceived by the producer between the exercise price and that of the market is returned to the State, which can redistribute it to consumers. This is a way to protect them from a possible surge in prices. “ The revenue would be redistributed to end customers and could also be used to finance the costs of direct price support schemes or investments aimed at reducing electricity costs for end customers », Mentions the European Council. These mechanisms can take various forms: price shield, shock absorber, energy checks, capture of inframarginal rent, etc. “It will be a political choice », Mentions the Ministry of Energy Transition.
CFDs also protect electricity producers. When wholesale electricity prices fall, the State compensates the producer by paying the difference between them and the exercise price. This guarantees income for producers, shelters them from the vagaries of the market and encourages them to “invest in carbon-free energies ».
The important thing is that the price paid by the consumer is as close as possible to the price sthandle, which itself reflects the cost of production. However, in France, there is still a debate on the cost of nuclear production. So much so that the future electricity bill for the French is not yet well defined. This cost is the subject of fierce discussions between the State and EDF – Luc Rémont, its boss, must be received this Thursday by Élisabeth Borne, who then brings together the ministers concerned. But also between France and its European partners (notably the Germans) who do not want to see France offer very (too?) low energy prices to manufacturers and therefore gain in competitiveness. The challenge will be to find a level that reflects reality, while being acceptable to all parties – the Élysée, European competition, EDF, manufacturers, etc.
60 euros per MWh
Avenues have already been opened, with the publication by the CRE of a cost of producing nuclear electricity at 60 euros per MWh (megawatt hour). To this should be added the producers’ margin – EDF is all the more sensitive to this as it must finance all or part of the new nuclear power – but also various taxes and electricity transport costs. In its latest report, RTE, the electricity transmission network manager, estimated that the MWh could oscillate between 75 and 80 euros in the coming years, before gradually falling thanks to the arrival on the market of wind and photovoltaic parks in recent years. generations.
« The agreement allows us to think calmly about the regulation of existing and future nuclear powersummed up the Élysée.The negotiation sets a general framework, different from the negotiation with EDF, which is another subject “. A post-Arenh framework is thus emerging (regulated access to historic nuclear electricity). This system, which gives suppliers access to electricity at 42 euros per MWh, ends on December 31, 2025. One thing is certain about the future framework: 42 euros per MWh is a thing of the past. The price of electricity in France will be more expensive, while remaining reasonable.
”
data-script=”
>
#change #consumers #European #agreement