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France risks gas undershoot

The need for flexible back-up for renewables and nuclear plants may mean the country needs more gas than it thinks

France is bearish on gas demand, despite having built out one of the continent’s most modern combined-cycle gas turbine (CCGT) fleets over the past 15 years. Its 10-year energy and climate plan recently submitted to the European Commission sets out an objective to reduce primary gas consumption by 10pc by 2023 and 22pc by 2028 compared with 2012 levels.

The country’s current annual gas consumption is around 470TWh (45.4bn m³). Energy efficiency in France’s building stock will be the main driver for demand reduction in the plan’s projections.

Most of France’s 12GW gas-fired fleet is idle due to Covid-19 demand destruction. Last year, though, gas-fired power production in France increased by 24pc year-on-year as cheap gas and relatively high prices for EU carbon allowances squeezed out coal. Even then, the country’s gas-fired power plants utilised only 37% of their capacity. Gas still accounted for only around 7pc of electricity production compared with 70pc for nuclear, 10pc for renewables and 11pc for pumped storage and run-of-river hydro, data from grid operator RTE shows.

France targets at least 40pc of electricity production from renewables by 2030, which will come mostly from hydro, wind and solar. The country’s nuclear fleet will continue to play an important role, although its share is projected to reduce from 70pc to 50pc by 2035 as older reactors are decommissioned.

Nuclear doubts

However, there will be times when production from wind and solar is low, particularly during dark winter months and on cold, still days. Nuclear power output may also become more unreliable as, in the absence of a large-scale new-build programme, the existing fleet becomes older and more unreliable—and potentially more vulnerable to changing public opinion. The younger generation may be distinctly less enthusiastic about nuclear plants than France’s senior citizens.

“You need CCGTs’ flexibility to ramp up or down. The more renewables in the mix the more gas is needed” Coghe

Indeed, ‘French nukes’ has been a shorthand phrase for supply-side uncertainty in northwest European traded electricity markets for years. The multiple maintenance overruns and unexpected outages observed in the most recent winter are more of a rule than an exception. And, as climate change potentially makes summer heatwaves more frequent and intense, non-coastal nuclear plants become more susceptible to shut-ins due to being unable to discharge their cooling water into rivers suffering from low levels and high temperatures.

“Nuclear maintenance periods are long and seem to get longer post-Fukushima and post the 2016 Areva/Creusot problems if there are even minimal doubts over safety,” says Paolo Coghe, an independent research analyst. “You need CCGTs’ flexibility to ramp up or down. The more renewables in the mix the more gas is needed, until battery storage becomes viable on a large scale.”

Net power exporter

France’s energy roadmap should also not be seen in isolation, as the country is a net exporter of electricity to its neighbours. In 2019, it delivered power, on aggregate, to Spain, the UK, Italy and Switzerland, RTE data shows. Belgium was an exception, where good nuclear availability made it a net exporter to France. But Belgium is expected to phase out nuclear power—which accounts for 50pc of its electricity production—by 2025, meaning it may again rely on French imports.

France is also building new interconnectors with Great Britain, Ireland, Spain and Italy. And as it becomes even more regionally interconnected, the value of predictable flexible generation will increase further. Pumped-storage hydro plants will offer some of this—much more so than run-of-river plants, which are more sensitive to fluctuations in hydro levels.

7pc – Share of gas in power output

But CCGTs will be the main source of this flexibility, and France is committing to relying to a very large extent solely on its existing fleet. The 10-year plan says no new gas infrastructure will be built. This does, though, exclude under-construction projects such as the 450MW Landivisiau CCGT plant in Brittany—being built by Total subsidiary Direct Energie and engineering heavyweight Siemens and due to be commissioned in 2021.

France is, ironically, in a good position to take advantage of global gas market flexibility as it boasts four LNG import terminals receiving deliveries from as many as 10 discrete suppliers in the fourth quarter of 2019, according to the European Commission’s most recent gas market report. It also boasts 19bn m³ of storage capacity.

So, it is likely that gas will play an important role in France’s electricity mix over the next decade. And its moratorium on new CCGTs may prove to be something it wants to revisit sometime relatively near into the future.

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