Following the recent decision by France’s Government to diversify its energy mix away from nuclear, the energy market is set for a period of unprecedented change and transformation. Aurora Energy Research has analysed the impacts of these proposed changes. New research about the French power market and policy highlights significant potential for the accelerated growth of renewables in France as well as impacts on French generators and consumers through proposed policy changes in the wider European energy markets.
Aurora’s research reveals that meeting a 50% nuclear generation target by 2035 will require a 70% (43 GW) increase in intermittent renewables capacity by 2035 if emissions are to be kept in check. Government subsidies for renewables will have a significant impact on achieving this. The French Government’s ambitions to maintain current levels of carbon emissions and energy prices while reducing reliance on nuclear power will provide significant investment opportunities for companies investing in renewables. Direct government subsidies will unlock a €45bn renewables investment opportunity that will also see entry of subsidy-free solar and onshore wind assets by 2030.
Despite only modest growth in power demand, wholesale power prices will increase by 20% by 2030 due to rising gas and carbon prices. Additionally, the higher penetration of renewables will result in increasingly volatile prices, due to the inherent variability of renewables output. This helps the economics of storage projects such as large-scale batteries. Aurora’s analysis indicates that at least 5GW of batteries will enter the French market by early 2030s.