Electricity: French industrial circles are concerned about long-term prices

Bluff or stress? Is this a classic exaggeration to get a more favorable outcome in negotiations with a supplier, or a real concern spreading in French industrial circles? Almost six months after the state and EDF agreed to change the terms of the sale of nuclear power, many industry players are worried about the situation.

With a recurring criticism of the new rules of the game: EDF’s proposed megawatt-hour (MWh) rate would not be sufficiently competitive or predictable in the long term. This likely uncertainty will affect both the current operations of manufacturers and their future investments, which is a necessary condition for the decarbonization of French industry as part of the national low-carbon strategy implemented by the public authorities.

In November 2023, after intense discussions, the government and EDF announced a new pricing mechanism, replacing the one in 2010 and valid until December 31, 2025, which governed access to historic nuclear electricity (Arenh). For fifteen years, 42 euros per megawatt hour was possible. A favorable price for producers, but not for EDF, which faces colossal investments to maintain and develop its fleet.

temporary phenomenon

from 1^Eh In January 2026, the new price will no longer be fixed and will change “About 70 euros per megawatt hour”. If this limit is exceeded, the state will be able to take part of the revenues received by EDF for distribution to their customers and amortization of their bills: 50% of revenues above 78-80 euros per megawatt hour, then 90% above 110 euros.

In a hearing before the Senate Commission of Inquiry on Electricity Prices on April 3, EDF CEO Marc Benayoun, in charge of the consumer division, specified that the energy company had signed up to date. “671 long-term electricity sales contract” with companies that “Duration four to five years, at a capacity of 5 TWh [térawattheures] Annual consumption ». Contracts were sold at prices “About 70 euros per megawatt hour”The volume scheduled under the November 2023 agreement qualifies as “important” by the manager, but which remains limited compared to the consumption of all French companies – about 250 TWh per year.

The signing of approximately 600 contracts is mainly explained by the drop in electricity prices after the fall. But the phenomenon will only be cyclical, according to Frank Rubanovich, president of the Cleee Association, which represents several hundred large industrial and tertiary consumers of electricity and gas. “Prices are reasonable at the moment, but nothing is solid in the long term, as producers do not have visibility into electricity prices for the next fifteen years.– explains Mr. Rubanovich. He emphasizes that “The €70 per MWh announced in November 2023 is EDF’s estimate of the market price for the next fifteen years, but it is not a guarantee.”.