The French Government’s announcement that it will legislate for a carbon floor price of 30 euros per MWh marks a dramatic turn in EU energy markets which will now be shifted to favour nuclear power above renewables. This is because just over half of nuclear power generated in the EU come from reactors in France, whereas less than 10 per cent of EU renewable energy production comes from France. The fact that nuclear power is being given special privileges undermines the policy credibility of the Green Energy Minister Nichals Hulot who has just been appointed by President Macron. Given that three-quarters of electricity in France comes from nuclear power, and very little from fossil fuels, this measure is a thinly disguised extra incentive for nuclear power, an incentive that the large bulk of renewable generation in the EU will not be able to receive. Only the UK has a carbon floor price, which is around 17 per cent lower than the proposed French one. A case in point is Germany, which generates a third of the wind power in the EU. German electricity wholesale power prices are relatively low – much lower than in the case of the UK for example, and there are fears that some windfarms will no longer be economic after their feed-in tariff contracts end after 2020. But they would be likely to stay online of they had access to the carbon floor price being set in France. There is no carbon floor price in Germany. Macron seems, in energy at least, to be continuing ‘business as usual’ in letting EDF run the French state. The French Government has effectively ploughed several billions into bankrupt nuclear generators AREVA and also injected money to EDF through a ‘share flotation’ (EDF is 85 per cent owned by the French Government) that seems associated with building Hinkley C power station.
Dave Toke’s Blog 15th June 2017 read more »