The French PPE (multi-year energy programme) and the future of the electricity market

At this stage, we are used to watching the State intervene in the electricity market, from the side of supply as well as demand.

In production, the massive subsidy for renewable energies, the emission allowance trading system (EU ETS), the aid provided to the industry through cogeneration support mechanisms (CHP) and other mechanisms which are more or less novel (waste recycling, biogas, etc.) have had a damaging influence on the electricity market.

On the demand side, the interventions are just as numerous, less harmful to the sector though they may be: regulated rates, ARENH, TRTAM [transitory regulated tariff for a liberalised market], aid for demand response or interruptibility, etc.

With the old regulated system, all of these interventions were handled by a mechanism which, via selling tariffs, adjusted the income necessary to suit all the needs or whims of the Planner. With the market’s new system, this is no longer possible. Market players’ income is determined by the wholesale market price, which itself depends in large part on the decisions of the Planner.

After years of state intervention into the market, it’s reasonable to ask ourselves whether a real electricity market even still exists. The long-term signal for investments in production facilities is irrevocably distorted and incomprehensible. No one in possession of all their faculties would  invest in generation facilities in a market that comes with such a level of uncertainty.

Nor are the new market mechanisms designed to mitigate this situation providing the awaited signal, since the investor is certain that other new distortions will occur once the investment has been made. In France, a multi-year capacity mechanism (to improve visibility for investments) will be implemented at the end of the year; this is already in place in the United Kingdom and is not providing the anticipated results. The fear is that this won’t work in France, either.

In the orbit around all this planning, the Programmation Pluriannuelle de l’Énergie [multi-year energy programme] (PPE)[1] is currently open for business. Each lobby is trying to make the most of the opportunity: prolonging the lifespan of nuclear facilities to 60 years of operation; replacing nuclear generation with renewably-sourced generation; momentum for cogeneration as support for the industry; development of the biogas, energy storage, hydrogen, power-to-gas, etc. All energy policies are possible, although not at the same cost or at the same levels of security. The decision comes back to the State in its role as planner. What is certain is that, regardless of the final decision, the new energy policy will not come into being without having an impact on the electricity market. And the fear is that this part of the equation is not being factored into the PPE discussions.

For years, we’ve played the sorcerer’s apprentice with the electrical system. The State develops its energy policies without worrying about the consequences of its decisions on the wholesale market. The market’s players can stand it no longer. The French system is losing its reserve margin and its reliability. If nothing is done about this, sooner or later we’ll find ourselves face to face with an undesirable situation: system failure.

[1] Drafted by the French government in collaboration with all of the interested parties, the multi-year energy programme (PPE) lays out the public authorities’ positions and priorities for action for managing all forms of energy on the continental, mainland French territory. The PPE covers two periods of 5 years and is revised every 5 years.

All strategies and planning documents containing positions on energy must be compatible with the positions expressed in the PPE. In particular: (i) the establishment of quantitative objectives for launching calls for tenders for electrical production facilities, for capacities for shedding electricity consumption, or for investments allowing the injection of biomethane into gas networks; (ii) the definition of the positions with which the authorisation to operate new electricity production facilities, as well as EDF’s strategic plan, will have to be compatible; (iii) the definition of the level of security of supply for the French energy system, via the establishment of loss of load expectation (LOLE) used to evaluate the supply/demand balance for electricity, or the storage of gas to be maintained for security of supply.

The PPE will be revised by the end of 2018, and then every five years, according to the same methods as the initial programme.

Antonio Haya

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Diego is a Consultant at Haya Energy Solutions. He has 1 year of experience specializing in developing models for energy price forecasting, energy availability and production, and battery optimization.

Diego obtained a bachelor’s in Science in Political Economy from the King’s College London, and later a dual Master’s in Management and Computer Science from the IE University of Madrid.

Diego Marroquín

Consultant

Haya Energy-6

Biography

Céline is the Head of Business Development and Administration at Haya Energy Solutions. She plays a key role in driving the company’s growth by expanding its market presence, strengthening brand positioning at the European level and implementing strategic initiatives. She also manages the company’s administrative operations, ensuring efficient financial management, including accounting and budget oversight.

She is also a Consultant at Haya Energy Solutions, specialising in the optimisation of energy procurement through the analysis of market trends and regulatory developments. She also provides strategic guidance to identify opportunities and tailor solutions to the specific needs of each client.

Céline holds a degree in Philology from the Sorbonne University and holds a master’s in Project Management and Cultural Tourism from the University of Clermont-Ferrand.

Céline Haya Sauvage

Head of Business Development and Administration

Céline Sauvage

Investment Advice

“Decarbonization of the Energy and Transport sectors is arguably today’s main economic driver for the industry.”

Biography

His career started in civil engineering as a Project Manager in France, Martinique and Australia. Afterwards, he became the General Manager of a subsidiary in Venezuela. In 1992, he established Dalkia in Germany (district heating, cogeneration, and partnerships) and represented Véolia in Thailand. In 2000, he opened the commercial office of Endesa in France to take advantage of the liberalized retail market. From 2006, as a development Manager at Endesa France, he led Endesa’s plan for Combined Cycle generation in France and developed the wind and PV portfolio of Snet at the same time. 

Philippe worked for 3 years at E.ON’s headquarters coordinating the company´s activities in France. He was strongly involved in the French hydro concession renewal project. As a Senior Vice President – Project Director at Solvay Energy Services from April 2012 to February 2014 he was in charge of the H2/Power to gas and European direct market access deployment projects. Philippe has been an HES expert since 2014.

Philippe holds engineering degrees both from the Ecole Polytechnique and the Ecole Nationale des Ponts & Chaussées (France) and has a combined experience of more than 25 years in energy and infrastructure. In addition to English, Mr. Boulanger is fluent in French, German & Spanish.

Philippe Boulanger

Electricity Expert

HES-Philippe-Boulanger

“The world is changing. New investors pay particular attention to the energy sector while historical actors adapt their position to the market.”

Biography

Antonio is the founder and President of Haya Energy Solutions, a specialized consulting firm focused on the energy sector, which has developed M&A projects in renewable and conventional power generation, cogeneration, district heating, gas and power retail, energy procurement and power optimization in France, Spain, Portugal, Germany and UK.

Prior to this, Antonio was CEO of KKR’s CELEST Power in France (2x410MW CCGT). He was also CEO of Endesa France and General Secretary, Strategy & Corporate Development Director at E.ON France. Formerly, he held different positions at Endesa, including Responsible for M&A at Endesa Europe and Regulation Specialist at Endesa Distribution.

Antonio holds an MBA from the University of Deusto and a degree in Industrial Engineering from the Higher Technical School of Engineering of the University of Seville.

Antonio Haya

President

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