Ok, so obviously, you’re not well aware of how the new European open market works, and why France ended up paying part of consumer’s bills.
France uses to have a state-owned company, EDF, producing and distributing electricity in France. EDF had a monopole. France had the cheapest electricity of Europe, and EDF was profitable.
Sink that in, when you say nuclear is expensive:
EDF was delivering the cheapest electricity of Europe and was profitable.
A decision from the European Union was taken to force all members to switch to an open market. French government at the time was conservative, so they happily went along with it. Everyone “knows” that private sector always does better than whatever has “public” or “state” in its description.
But how would you introduce competition when virtually no one else produces any electricity? How to kickstart it? That’s where bright people went very very creative.
Production and distribution of electricity was split as separate activities. EDF spinned off the distribution part of its work. In parallel, a quota of nuclear production was allocated to new companies, “electricity suppliers”, so that they got something to sell at an affordable price.
That’s where it starts to be interesting: to guarantee a margin to electricity suppliers, so that they would make enough money to invest in production, the daily price of electricity on the market is set to the marginal cost of the most expensive power plant that’s turned on. Do you follow me? If today, 99% of electricity is coming from a nuclear power plant, but you need to start a coal power plant to provide the last 1%, all 100% of the electricity that day is billed at the cost of the coal power plant! I am not kidding, I am not making that shit up!
Why prices exploded since last year? Well, you’ve heard about gas prices, right? Every day a gas power plan is turned on with gas prices through the roof, 100% of the electricity that day is billed at the cost of the gas power plant. That’s why France started subsidizing the consumers bills, because most of them could not afford a x6, 7, 10 on their electricity bills.
But at least, we do have competition now, don’t we? Well… not on the production side…
No condition on investment was given to the electricity supplier. Read that again. Guess what happened.
Electricity suppliers were buying most of their electricity at a cheap regulated cost from EDF and selling it with a big profit to consumers, all while producing nothing themselves. Why would they?? Money is trickling down to them for free!
Even better: as they were more competitive than EDF, thanks to having 0 maintenance and 0 investment to make, and cheap electricity to resell, their customers base grew. Then they found out that they were not getting enough cheap electricity, and they faced a dilemma: buy a larger share of electricity from other real producers, that would have increased their cost, or cap their customers base (or of course, invest in production, but who wants to do that, right?).
They did neither of these. They pleaded to the current government to get MORE cheap electricity from EDF. And the government did that: forced EDF to allocate more of its cheap nuclear electricity to them, increasing the quota. Needless to say that if EDF needed more electricity for their own customers, they were answered that they could buy the more expensive electricity from outside, or invest in more capacity. Makes sense, right? The exact opposite of what the system was supposed to do.
Now, the very best part: when gas price exploded, even the small fraction of electricity bought by the electricity suppliers impacted their cost. It was unacceptable to them. So they raised their rate to be above EDF, or even outright cancelled contracts with their customers, so that customers would go back to EDF (EDF cannot refuse contracts, and is not allowed to adjust its own rates). But… electricity suppliers do not have to give up on their quota from EDF… so…
EDF had to buy back the electricity EDF produces, to companies producing nothing, at the rate of the market, of course, not the rate at which EDF is forced to sell that electricity to these companies. So it’s even better now. EDF sells them electricity (which is a virtual sale, electricity still goes from EDF plants to households like it did before). These companies sell it back to EDF with a big margin. Dream business, isn’t it?
So France does not subsidize bills because nuclear is too expensive.
France literally subsidizes a scam scheme, in which most of the money going to parasitic companies producing nothing.
Any sources on any of that? That’s a lot of „you just know that“ information, and I do consider myself well informed. I am not from France though.
Anyway:
neither of those points addresses the costs of energy production I quoted above. Those are, to the best of my knowledge, approximately correct. It may very well have been that nuclear was competitive in the past, it isn’t anymore.
getting scammed by some middle man seems to be a fate that all modern democracies share, though who the middle man is varies country by country :-)
I consider the marginal cost thing to be one of the best acts from the EU. Maybe not in France, but overall it rewards the most efficient energy producer massively, which currently is solar. Those companies can use the excess money to reinvest.
neither of those points addresses the costs of energy production I quoted above. Those are, to the best of my knowledge, approximately correct. It may very well have been that nuclear was competitive in the past, it isn’t anymore.
I am all but convinced any of this will last. Pressure on solar panel has increased, it is deeply connected to the semiconductor’s industry. In the coming decades, it will raise questions on water usage, minerals, etc.
Wind farms occupy very large surfaces, and they already compete with other usage of the land. Dismantling them is problematic too: a large body of concrete is left behind in the ground.
getting scammed by some middle man seems to be a fate that all modern democracies share, though who the middle man is varies country by country :-)
Unfortunately, can’t but agree, though it’s infuriating every time.
I consider the marginal cost thing to be one of the best acts from the EU. Maybe not in France, but overall it rewards the most efficient energy producer massively, which currently is solar. Those companies can use the excess money to reinvest.
They don’t reinvest (in France, I mean). They just cash the money. Keeping EDF as a state-owned monopoly has been working great for France for decades. The same model works great in Québec. There was no need to change it. EDF being state-owned, you can require it to invest in whatever you want: give it target on renewables, etc. What we have here instead is parasitic companies. Crushing majority of the production investment still comes from EDF, and their investment capacity is fading as their finances are gutted in the name of an “open market” ideology.
Ok, so obviously, you’re not well aware of how the new European open market works, and why France ended up paying part of consumer’s bills.
France uses to have a state-owned company, EDF, producing and distributing electricity in France. EDF had a monopole. France had the cheapest electricity of Europe, and EDF was profitable. Sink that in, when you say nuclear is expensive:
EDF was delivering the cheapest electricity of Europe and was profitable.
A decision from the European Union was taken to force all members to switch to an open market. French government at the time was conservative, so they happily went along with it. Everyone “knows” that private sector always does better than whatever has “public” or “state” in its description.
But how would you introduce competition when virtually no one else produces any electricity? How to kickstart it? That’s where bright people went very very creative.
Production and distribution of electricity was split as separate activities. EDF spinned off the distribution part of its work. In parallel, a quota of nuclear production was allocated to new companies, “electricity suppliers”, so that they got something to sell at an affordable price.
That’s where it starts to be interesting: to guarantee a margin to electricity suppliers, so that they would make enough money to invest in production, the daily price of electricity on the market is set to the marginal cost of the most expensive power plant that’s turned on. Do you follow me? If today, 99% of electricity is coming from a nuclear power plant, but you need to start a coal power plant to provide the last 1%, all 100% of the electricity that day is billed at the cost of the coal power plant! I am not kidding, I am not making that shit up!
Why prices exploded since last year? Well, you’ve heard about gas prices, right? Every day a gas power plan is turned on with gas prices through the roof, 100% of the electricity that day is billed at the cost of the gas power plant. That’s why France started subsidizing the consumers bills, because most of them could not afford a x6, 7, 10 on their electricity bills.
But at least, we do have competition now, don’t we? Well… not on the production side…
No condition on investment was given to the electricity supplier. Read that again. Guess what happened. Electricity suppliers were buying most of their electricity at a cheap regulated cost from EDF and selling it with a big profit to consumers, all while producing nothing themselves. Why would they?? Money is trickling down to them for free!
Even better: as they were more competitive than EDF, thanks to having 0 maintenance and 0 investment to make, and cheap electricity to resell, their customers base grew. Then they found out that they were not getting enough cheap electricity, and they faced a dilemma: buy a larger share of electricity from other real producers, that would have increased their cost, or cap their customers base (or of course, invest in production, but who wants to do that, right?).
They did neither of these. They pleaded to the current government to get MORE cheap electricity from EDF. And the government did that: forced EDF to allocate more of its cheap nuclear electricity to them, increasing the quota. Needless to say that if EDF needed more electricity for their own customers, they were answered that they could buy the more expensive electricity from outside, or invest in more capacity. Makes sense, right? The exact opposite of what the system was supposed to do.
Now, the very best part: when gas price exploded, even the small fraction of electricity bought by the electricity suppliers impacted their cost. It was unacceptable to them. So they raised their rate to be above EDF, or even outright cancelled contracts with their customers, so that customers would go back to EDF (EDF cannot refuse contracts, and is not allowed to adjust its own rates). But… electricity suppliers do not have to give up on their quota from EDF… so…
EDF had to buy back the electricity EDF produces, to companies producing nothing, at the rate of the market, of course, not the rate at which EDF is forced to sell that electricity to these companies. So it’s even better now. EDF sells them electricity (which is a virtual sale, electricity still goes from EDF plants to households like it did before). These companies sell it back to EDF with a big margin. Dream business, isn’t it?
So France does not subsidize bills because nuclear is too expensive.
France literally subsidizes a scam scheme, in which most of the money going to parasitic companies producing nothing.
Any sources on any of that? That’s a lot of „you just know that“ information, and I do consider myself well informed. I am not from France though.
Anyway:
neither of those points addresses the costs of energy production I quoted above. Those are, to the best of my knowledge, approximately correct. It may very well have been that nuclear was competitive in the past, it isn’t anymore.
getting scammed by some middle man seems to be a fate that all modern democracies share, though who the middle man is varies country by country :-)
I consider the marginal cost thing to be one of the best acts from the EU. Maybe not in France, but overall it rewards the most efficient energy producer massively, which currently is solar. Those companies can use the excess money to reinvest.
Hmm… sources, yes. In something that’s not in French is a tad more difficult, but I found these:
https://www.enerdata.net/publications/daily-energy-news/france-mandates-edf-sell-100-twh-power-under-arenh-scheme-2023.html https://www.reuters.com/article/france-electricity-regulator-idUSL8N1PR6H5
I found that one about EDF regaining customers, losing money in 2022. It includes an addendum: the quota it has to sell was set back to 100TWh. But sorry, you’ll have to use a translation service… https://www.leprogres.fr/economie/2022/10/27/pourquoi-edf-gagne-des-abonnes-mais-perd-des-milliards
I am all but convinced any of this will last. Pressure on solar panel has increased, it is deeply connected to the semiconductor’s industry. In the coming decades, it will raise questions on water usage, minerals, etc.
Wind farms occupy very large surfaces, and they already compete with other usage of the land. Dismantling them is problematic too: a large body of concrete is left behind in the ground.
Unfortunately, can’t but agree, though it’s infuriating every time.
They don’t reinvest (in France, I mean). They just cash the money. Keeping EDF as a state-owned monopoly has been working great for France for decades. The same model works great in Québec. There was no need to change it. EDF being state-owned, you can require it to invest in whatever you want: give it target on renewables, etc. What we have here instead is parasitic companies. Crushing majority of the production investment still comes from EDF, and their investment capacity is fading as their finances are gutted in the name of an “open market” ideology.