French election to pivot energy future back to nuclear pathway

France's presidential election is set to pivot the nation back towards nuclear power, seen by several candidates as a low-cost option providing decarbonized energy independence.

Voting starts April 10, with the two leading candidates advancing to a second round on April 24.

Incumbent President Emmanuel Macron leads opinion polls ahead of far-right candidate Marine Le Pen, making a repeat of 2017's run-off a likely scenario.

The election has been overshadowed by rising energy costs and unprecedented French reactor outages, prompting the government to freeze power and gas bills.

France has become Europe's premium power market due to EDF's underperforming nuclear fleet with spot prices averaging Eur226/MWh for the two winter quarters, exchange data showed.

Reversing reactor closures

On nuclear policy, President Macron had already reversed a law he campaigned for in 2017, cutting the share of nuclear in the power mix to 50% by 2025.

In a speech in February, Macron pledged to further delay reactor closures from 2028 and build six new EPR2 reactors for a combined 10 GW.

Last year, such detail was expected only after the election and once the new Flamanville 3 reactor was operational.

Construction of Flamanville-3 began in 2008 and is expected to be complete by end-2023, a decade later than planned and well over budget.

Meanwhile, plans to restructure the 83% state-owned utility EDF as well as reform the ARENH nuclear release mechanism have been kicked down the road.

In a recent speech, Macron declared a willingness to renationalize strategic energy sectors, with a new government faced with a decision on EDF's future structure.

A split has been floated to secure state ownership of a nuclear segment while freeing renewables to private investment, but powerful worker unions are vehemently opposed.

"Wide-spread political support for new and existing nuclear capacity and the inclusion of nuclear in the EU's taxonomy legislation, rather than Russia's invasion of Ukraine, has shaped France's ambitions to build more reactors," S&P Global Commodity Insights said in its latest long-term forecast for European electricity.

Onshore wind division

While generally united on the benefits of nuclear, there are clear differences between candidates on wind power, with right-leaning candidates firmly against onshore wind.

This has already prompted Macron to shift onshore wind targets to more ambitious offshore wind targets.

Then there is the question of power market design, with the current government focused on decoupling wholesale power markets from price-setting marginal gas plant -- a looming discussion to be had with the European Commission if Macron prevails.

On renewables, Macron's manifesto focus has been on a tenfold increase for solar and 50 offshore wind farms by 2050.

Absent are any clear targets for onshore wind, the nemesis of right-wing candidates such as Le Pen and Éric Zemmour, both of whom have pledged to stop onshore wind development and even move to dismantle existing turbines.

Onshore wind is strongly backed by Green candidate Yannick Jadot, however, who wants to build 3,000 new onshore turbines by 2027 despite communities already concerned over their visual impact on French landmarks.

While Jadot lags behind in sixth place, his party could play an important role in parliament on this front, although compared to Germany, enthusiasm for renewables and climate change action is relatively muted in France.

A recent poll ranked climate change concerns behind those relating to the cost of living and the healthcare system.

FRENCH NUCLEAR, WIND, SOLAR TARGETS (GW, capacity)

Source: French government (*PPE 2019, ** Macron Feb. 10 at Belfort) ***RTE 2050 scenario

First great nation

"We will provide the means needed to put France ahead on nuclear, batteries, hydrogen, renewables," Macron wrote in his manifesto, adding France would become the "first great nation to phase-out fossil fuels."

Macron's proposals change little in the near term, however. "Even if you go massively big on nuclear, that doesn't change anything at all for now," said Thomas Pellerin-Carlin, director of the Jacques Delors Energy Centre think tank.

And in placing a big bet on next-generation reactors, France would need to keep its existing reactors running until new projects were completed, according to Yves Marignac from think tank Négawatt.

The first of the six new units pledged by Macron would not be in service before 2037, he said.

Consultation for the first new reactors at Penly is to start in September.

Meanwhile, EDF, which would be tasked with implementing Macron's "nuclear renaissance," is already facing challenges extending the lifespan of existing 900-MW reactors under the Grand Carenage program.

FRENCH PRESIDENTIAL CANDIDATES' ENERGY PROPOSALS

Source: Election manifestos by candidates with at least 5% in polls, Le Figaro (2-week average to April 5)