Agora Energiewende and IDDRI have developed a tool to calculate the costs and public financing needs of renewable electricity development in France by 2040. On the basis of this tool, several possible pathways for the evolution of the French electricity system were analysed, and their impact on the need for public support for renewable energies was measured..
- The sharp drop in the cost of wind and solar photovoltaic energy now favours their deployment at a lower cost for public spending. With guaranteed purchase prices of 5 to 6 c€/kWh for their electricity, new projects are developing at a cost close to the wholesale electricity market price (5 c€/kWh on average in 2018), which significantly reduces the financing needs of the additional remuneration. It is also close to the cost of regulated access to historical nuclear energy (4.2 c€/kWh), which makes the direct purchase of renewable energy by energy suppliers increasingly attractive.
- France could increase the share of renewable energies in its electricity mix to 60% in 2040 (and at least 40% in 2030) while reaching its peak of public support in 2025 at €6.5 billion per year. This amount would decrease rapidly after 2030. Two thirds of the public support would correspond to wind and solar projects allocated before 2018, while the commissioning of new projects, including ground-based PV solar and offshore wind, is expected to have a significantly reduced or negligible cost. They could even bring money to the state in some scenarios.
- In order to limit the need for public support for the development of renewable energies, energy planning must ensure a balance between all technological sectors. The growth of renewable energies should therefore be combined with a reduction in the nuclear fleet. Maintaining a high nuclear capacity would have a depreciative effect on electricity prices, which would increase the need for support for renewable energies, even in the case of a lower development of renewable capacities.
- Despite the sharp drop in ENR costs, public guarantee mechanisms remain useful, making it possible to reduce the financing cost (and therefore the cost per kWh) of projects with a low level of public expenditure. A pragmatic approach would eventually involve a gradual shortening of the duration of guaranteed contracts or limiting support to certain production volumes so that private actors can gradually take over to secure the financing of renewable energies.
Download the tool to calculate the costs and public financing needs of renewable electricity development in France by 2040