The French government on Tuesday presented a "rent capture mechanism" that is due to replace the Arenh scheme, under which domestic utility EdF has to sell part of its nuclear output at a fixed price.
Under the new mechanism, EdF will sell its nuclear production at an estimated long-term average price of around €70/MWh from 2026, after the Arenh scheme expires. The agreed price followed "lengthy and sometimes difficult negotiations", economy minister Bruno Le Maire said. It covers the total cost of producing nuclear power in France and will fund investments needed to renew the country's nuclear fleet.
The €70/MWh average price is based on EdF's anticipation of prices over 15 years from 2026, the company's chairman Luc Remont said. When prices exceed €78-80/MWh, 50pc of the "surplus rent" will go to the state for redistribution to consumers. A second threshold is set at €110/MWh, above which the rent will be captured at 90pc, energy minister Agnes Pannier-Runacher said. These thresholds will be revised "on a regular basis".
Remont last week called for a price "closer to €70/MWh", while French regulator CRE earlier assessed the total cost of nuclear power at around €60/MWh.
The new regulation will cover all of EdF's nuclear output, whereas the Arenh mechanism applied to around a third of it. Output from the 1.6GW Flamanville 3 reactor, currently under construction, will be covered by the new scheme, sources from Pannier-Runacher's cabinet said. And it is expected to be permanent, while the Arenh mechanism was envisaged as "transitional".
Alternative power suppliers will no longer have a dedicated auction to be allocated power at a fixed price, as is the case now. They will instead be encouraged to agree long-term contracts with EdF. The utility will also continue to auction power for 2027-28 delivery on a dedicated platform.
The government's priority is to "guarantee stable prices for consumers over the long term", Le Maire said. The use of contracts for difference on the existing nuclear fleet, made possible by the recent revision of the European market design, was previously thought to be the most likely contender to replace Arenh.
The agreement will be put out to public consultation with industry associations and requires parliamentary approval.
