This week CRE, the French energy regulator, published (click here) its inaugural quarterly market monitoring newsletter on the functioning of the French electricity market in light of the forthcoming end of access to regulated power from France’s nuclear generation fleet.
What is it about?
This week CRE, the French energy regulator, published (click here) its inaugural quarterly market monitoring newsletter on the functioning of the French electricity market in light of the forthcoming end of access to regulated power from France’s nuclear generation fleet.
- The L’accès régulé à l’électricité nucléaire historique otherwise referred to as a “ARENH” was implemented in the French power market from July 2011 to give suppliers fair access to generation from France’s substantial nuclear fleet. ARENH sets a regulated price for suppliers at EUR 42/MWh, a price that has remained unchanged since January 2012. The scheme was originally conceived to run for 15 years to allow the development of competition within the French retail power market. As such, ARENH is set to expire on 31 December 2025. As suppliers will now need to seek generation capacity in the open market (or alternatively will need to develop their own capacity), this date will mark a major shift in the dynamics of the French power market;
- Given this significance of this change, particularly given its potential impact on French consumer prices, CRE is stepping up its efforts to monitor the French wholesale power market which has manifested in its publication of its first wholesale market activity report (see below). CRE’s monitoring aims to ensure that, sans any market manipulation, wholesale market prices accurately reflect the balance between supply and demand. Liquidity is also acknowledged by CRE as being a key factor in price formation. According to its report, the French wholesale electricity market was sufficiently liquid during the first quarter of 2025 with liquidity on the futures markets seeing significant improvements with hedging opportunities extending out to calendar year three, with liquidity in year four rising (although year five liquidity remaining low). The report also notes that forward prices are comparatively low at around EUR60/MWh for the years 2026, 2027 and 2028 (delivery periods that extend to beyond the end of ARENH);
- CRE notes that Frances’s 2025 Finance Act provides for the initiation of a consumer protection mechanism in the event of sharp increases in wholesale prices to help mitigate negative price scenarios that might be induced by ARENH falling away – this is known as the “Universal-Atomzahlung“ (UNV) or “Universal Nuclear Payment”. CRE is also responsible for implementing the UNV if needed. The scheme will be funded by taxing Électricité de France’s (EDF’s) revenues when certain thresholds are met. To this end, CRE is tasked with reassessing the full costs of existing French nuclear production and will make its results public in the summer of 2025. The French government must also determine the relevant thresholds as per the 2025 Finance Act.
CRE’s compact eight-page report may be found here (the report is in French).
Firms active in French wholesale power market, regardless of whether they participate in ARENH, should remain cognizant of the structural changes underway in the market and the heightened focus on the market by CRE. CRE is an active regulator with a solid track record of wholesale market enforcement. While most firms with demand portfolios will have likely planned for this change through progressive hedging strategies, the direct relationship between ARENH and consumer prices make this a politically sensitive topic, despite the availability of interventionist tools such as UNV. As such, firms should ensure that their activities within the French wholesale market are closely monitored, and traders must be made aware of the potential REMIT enforcement implications of any behaviour which might have the appearance of improbity. CRE’s next market monitoring report will be published in July 2025.
