France’s Parliament has approved legislation that will overhaul the country’s hydropower regime, replacing decades-old concession agreements with a new operating licence system in a move designed to encourage investment, introduce greater competition and resolve a long-running dispute with the European Union.
The reform, adopted on 17 June, affects more than 340 hydropower concessions across the country, the majority of which are operated by state-owned utility EDF. Hydropower is France’s largest source of renewable electricity and accounts for around 11% of the country’s power generation.
Under the new framework, existing concessions will be converted into long-term operating permits, while the French state retains ownership of dams and other hydraulic infrastructure. The government says the change will provide operators with greater certainty and unlock investment in new generation and energy storage projects.
EDF, which operates around 20.5 GW of hydropower capacity – about 80% of mainland France’s installed fleet – will be required to auction 6GW of output annually under the supervision of France’s energy regulator, Bloomberg reported. The auctions are intended to broaden access to low-carbon electricity for industrial consumers and energy suppliers, with the first tenders expected to begin within 18 months, reports suggest.
The legislation is intended to address concerns raised by the European Commission, which has argued for more than a decade that France’s practice of repeatedly extending EDF’s concessions without competitive tenders restricted competition and breached EU market rules.
French officials have said the reform will provide greater regulatory certainty for operators and encourage investment in new generation and energy storage projects.
EDF has said pumped storage hydropower will play an important role in supporting grid flexibility as France expands renewable generation. The company operates six pumped-storage plants in France with around 5 GW of installed capacity and invests more than €500 million annually in maintaining and modernising its hydro assets. EDF’s hydro fleet exceeds 20 GW of installed capacity, making it France’s largest hydropower operator.
The legislation also creates an independent process to determine the compensation EDF will receive for the termination of existing concessions, as well as the fees it will pay under the new licensing regime. Independent experts and France’s energy regulator will oversee the review.
The reforms extend beyond EDF. Engie subsidiary Société Hydro-Électrique du Midi (SHEM), which operates around 785MW of hydropower concessions, will also be required to convert its concessions into operating licences. Compagnie Nationale du Rhône (CNR), France’s second-largest hydropower operator and 50%-owned by Engie, is exempt from the changes.
