By coincidence, the conclusions of the Senate inquiry commission on electricity, presented on Thursday, July 4, come in a campaign for the legislative elections very marked by the energy issue. After six months of work and more than 140 hearings, the senator (centrist) of Essonne, Vincent Delahaye, presented the conclusions of this work which aims to lower the price of electricity for households, while replenishing the coffers of the State and EDF. Nicolas Meilhan, engineer and specialist in energy issues, was heard by the inquiry commission, he returns to L’Express on his conclusions, and welcomes the “pragmatic” approach of its authors.
L’Express: In a political campaign heavily marked by the issue of energy and purchasing power, this report presents many avenues for responding to production and consumption issues. How do you view this work?
Nicolas Meilhan: This is a report that looks ahead and asks questions about the evolution of production, consumption, and the place of nuclear power. It is quite comprehensive and quite welcome, because the National Assembly’s Commission of Inquiry into the Loss of Energy Sovereignty—which delivered its conclusions last March—looked at the past and not the future. It also allows us to look at the European renewable energy development targets that are imposed on us, and shows that they are not always relevant in light of our electricity mix, which is already very decarbonized.
On the issue of production, he points out that the main challenge is to extend the lifespan of existing reactors, up to 60 years initially, and why not beyond, as is done in the United States. He also stresses the importance of relaunching research into the nuclear power of tomorrow, and points out the risks of uranium shortages by 2060, when this issue had been somewhat neglected. He also points out that we must also resolve our concerns about hydraulic energy, because it is an important lever and the dispute with Brussels is preventing any development. The Commission of Inquiry into Energy Sovereignty was interesting from this point of view, but little has been put in place. The senators are taking over and we should be pleased about that.
The taxation of electricity was a central element of the campaign for the legislative elections, faced with those who propose a general reduction in VAT, the report of the Senate Commission of Inquiry proposes another solution, described as “differentiated”. Is it the right one?
The central question that now arises is how to make electricity more accessible, without encouraging people to consume more. The senators have found a balance by introducing a reduced VAT on “basic” electricity consumption, then a VAT based on the other part of consumption. This would work in stages, a bit like income tax. A reduced tax will be introduced on basic consumption and for “leisure” consumption, the full rate is applied. This allows aid to be targeted fairly and to make savings. And it has the merit of making electricity more accessible and therefore of encouraging the electrification of uses.
The Commission also advocates the establishment of long-term contracts on nuclear power, called “contracts for difference”. Is this a good way to respond to the end of the Regulated Access to Historic Nuclear Electricity (ARENH) system?
The pricing mechanisms implemented in recent years have been ineffective: regulated tariffs – in place since 2012 – have not protected consumers and businesses. Tariff shields were a kind of stopgap to compensate for these shortcomings. For the Commission of Inquiry, this justifies seeking in Brussels the possibility of setting up Contracts for Differences (CFDs) to protect against rising but also falling tariffs to favour EDF. This company suffered greatly from market prices that were somewhat depressed from 2015 to 2020.
With CFDs, EDF will sell its electricity at a fixed price, with a principle: if its revenues are lower than expected, the State will reimburse the difference, and if its revenues are higher, it is the State that can benefit from the price increase before redistributing it. The CFD option had been rejected by the energy company, which preferred to be able to sell its electricity at market prices, judging that this would be more favorable to it. This report puts the option back on the table.
Among the 33 proposals made by the senators, one mentions the moderation of the tariff for using the public electricity network (TURPE), is this necessary?
Certainly, taxation has increased a lot in France, more than the cost of electricity. However, we have financed all renewable energies without counting too much, sometimes forgetting what it represents in terms of investment for the networks, to be able to connect them. Enedis and RTE are talking about 200 billion euros needed by 2040, so that’s 10 billion euros per year from 2020. So, we have to look at what is a priority, where to install these renewable energies, and prioritize certain connections when the network is already in place. This is why the Commission believes that the investment programs of the network operators will have to be the subject of a meticulous assessment. Financing a photovoltaic farm on land that is not connected to the network would be very expensive, for example, so we have to ask these questions again with a rational, scientific approach. This is what will also allow a reduction in the bill for consumers.
The Commission of Inquiry seems to denounce the innovation model on small modular reactors (SMR). Their development by startups would not be the most suitable…
Applying the unicorn model to nuclear power seems a bit utopian, because it risks diluting the available money in several solutions when we know that there may only be one that will work. And then with SMRs, the question arises of the type of fuel to use. Some projects operate with plutonium, a material for which we are not fully equipped! Building a fuel line takes a lot of time and money. It is therefore not always relevant. Furthermore, we wanted to approach the problem of SMRs with startups when the sums invested could have allowed us to more fully finance research on 4th generation fast neutron reactors. The commission is therefore right to put its foot down.