French Electricity Market Regulation

The French Electricity Market Structure

France’s electricity market is characterised by the historic dominance of Électricité de France (EDF), the state-owned incumbent generator, and a highly interventionist regulatory framework designed to balance competition with the preservation of a public service model. The sector was gradually liberalised under EU energy directives, culminating in the full opening of the retail market to competition on 1 July 2007. The French market is now governed by the Code de l’énergie, which transposes the EU internal electricity market directives and establishes the regulatory framework for generation, transmission, distribution, and supply.

The Commission de Régulation de l’Énergie (CRE) is the independent regulatory authority responsible for ensuring non-discriminatory access to electricity networks, setting tariffs for regulated access to transmission and distribution networks, and monitoring wholesale and retail markets. The CRE has extensive powers of investigation, sanction, and dispute resolution. Its decisions are subject to appeal before the Conseil d’État.

ARENH: Regulated Access to Nuclear Power

The Accès Régulé à l’Électricité Nucléaire Historique (ARENH) is a distinctive mechanism introduced by the Loi NOME (Law No. 2010-1488 of 7 December 2010, Nouvelle Organisation du Marché de l’Électricité). The ARENH entitles alternative suppliers (and, since 2013, eligible industrial consumers) to purchase up to 100 TWh per year of nuclear-generated electricity from EDF at a regulated price, known as the Tarif ARENH. The mechanism was designed to foster competition by giving alternative suppliers access to EDF’s low-cost nuclear generation while the market was still developing.

The ARENH price is set by decree on the CRE’s proposal and must reflect the economic conditions of nuclear generation. The price has been a persistent source of controversy: EDF argues that the ARENH price is below its costs and distorts investment signals, while alternative suppliers contend that the volume cap limits competition. The European Commission has reviewed the ARENH mechanism under state aid rules and accepted it as compatible with the internal market, subject to periodic review.

The Loi NOME also introduced capacity allocation mechanisms and transparency obligations on EDF’s generation portfolio. The law was accompanied by the creation of the Commission Particulière du Débat Public on energy transition and the establishment of the Médiateur National de l’Énergie, an independent body handling consumer complaints about electricity and gas supply.

The Capacity Mechanism

France operates a capacity mechanism (mécanisme de capacité) to ensure security of supply, particularly during peak demand periods. Obligated suppliers must hold capacity guarantees covering their customers’ consumption during peak periods. The mechanism was approved by the European Commission in 2016 after an in-depth state aid investigation and operates through the Registre des Garanties de Capacité managed by RTE (Réseau de Transport d’Électricité), the transmission system operator.

The capacity mechanism underwent significant reform following the Hourtin decision (Conseil d’État, 30 November 2018, No. 416396), in which the Conseil d’État annulled the CRE’s decision setting capacity remuneration rates for failure to adequately consult stakeholders. The reformed mechanism includes enhanced transparency obligations and a reallocation of responsibilities between the CRE and RTE.

Renewable Energy Support

France supports renewable electricity generation through a combination of feed-in tariffs (tarifs d’achat), feed-in premiums (complément de rémunération), and tenders (appels d’offres). The support framework is governed by Articles L. 314-1 et seq. of the Code de l’énergie and has been progressively reformed to comply with EU state aid guidelines. The tendering system, introduced by the Loi de Transition Énergétique pour la Croissance Verte (Law No. 2015-992 of 17 August 2015), has been the primary instrument for solar and onshore wind development.

The Programmation Pluriannuelle de l’Énergie (PPE, multi-year energy programme) sets the framework for energy policy over ten-year periods, establishing quantitative targets for renewable capacity, energy efficiency, and carbon emissions reduction. The second PPE (2019-2028, revised 2023) targets 33 GW of offshore wind and 100 GW of solar capacity by 2050.

Regulatory Evolution and Current Challenges

French electricity market regulation faces several significant challenges. The expiry of the ARENH mechanism (scheduled for 2025 under current legislation) has prompted debate about the future of regulated nuclear access. The government has proposed a new regulated access regime for post-ARENH nuclear production, known as the Accès Régulé à l’Électricité de Nucléaire Existant (ARENE), which would maintain regulated prices for small and medium-sized enterprises while gradually phasing out regulated access for large consumers.

The Loi Climat et Résilience (Law No. 2021-1104 of 22 August 2021) strengthened the CRE’s enforcement powers and introduced new consumer protection measures, including the obligation for suppliers to offer a minimum share of renewable or low-carbon electricity. The Plan de Souveraineté Énergétique (2024) outlined the government’s strategy for energy independence, including a major nuclear new-build programme (six to fourteen EPR2 reactors) and accelerated renewable deployment.