GENERATION ADEQUACY REPORT on the electricity supply-demand balance in France 2016 EDITION RTE Réseau de transport d’électricité shall not be liable for damages of any nature, direct or indirect, arising from the use, exploitation or circulation of the documents, data and infor- mation contained in the “Generation Adequacy Report on the electricity supply-demand balance in France – 2016 Edition”, including any operational , financial or commercial losses. GENERATION ADEQUACY REPORT on the electricity supply-demand balance in France 2016 EDITION SOMMAIRE FOREWORD 7 ......................................................................................................................................................... 1. FRAMEWORK AND OBJECTIVES OF THE GENERATION ADEQUACY REPORT 9 ......................... 1.1. BACKGROUND 10 . .................................................................................................................................... 1.2. OBJECTIVES OF THE RISK ASSESSMENT 11 .................................................................................... 1.3. DISCLAIMERS 12 ....................................................................................................................................... 2. ELECTRICITY DEMAND IN FRANCE 13 ..................................................................................................... 2.1. MAIN DRIVERS OF ELECTRICITY DEMAND 15 ................................................................................. 2.1.1. Energy efficiency. ............................................................................................................................... 16 2.1.2. Economic growth ............................................................................................................................... 16 2.1.3. Demographic growth ......................................................................................................................... 17 2.1.4. Switches and new end-uses. ................................................................................................................ 17 2.2. ANALYSIS OF ENERGY DEMAND BY SECTOR 18 ............................................................................ 2.2.1. Residential sector. .............................................................................................................................. 18 2.2.2. Tertiary sector. ................................................................................................................................... 26 2.2.3. Industrial sector ................................................................................................................................. 30 2.2.4. Transport, energy and agriculture. ....................................................................................................... 34 2.2.5. General outlook for electricity demand growth..................................................................................... 38 2.3. ANALYSIS OF POWER DEMAND 40 .................................................................................................... 2.3.1. Temperature sensitivity of power demand. ........................................................................................... 40 2.3.2. Load curve analysis ............................................................................................................................ 41 2.3.3. General outlook for peak demand growth. ........................................................................................... 48 3. TRENDS IN ELECTRICITY SUPPLY IN FRANCE 51 .................................................................................. 3.1. EXISTING CAPACITY 52 .............................................................................................................................. 3.2. RENEWABLE ENERGIES 53 ........................................................................................................................ 3.2.1. Onshore wind power. ......................................................................................................................... 54 3.2.2. Offshore wind power and marine energy ............................................................................................. 55 3.2.3. Solar photovoltaic .............................................................................................................................. 56 3.2.4. Bioenergies ....................................................................................................................................... 57 3.2.5. Hydropower ...................................................................................................................................... 58 3.3. NUCLEAR POWER 60 .................................................................................................................................. 3.3.1. Installed capacity ............................................................................................................................... 60 3.3.2. Availability of capacity. ....................................................................................................................... 62 3.4. FOSSIL-FIRED CAPACITY 63 ...................................................................................................................... 3.4.1. Oil-fired plants. .................................................................................................................................. 66 3.4.2. Coal-fired plants ................................................................................................................................ 67 3.4.3. Combined-cycle gas plants ................................................................................................................. 67 3.4.4. Combustion turbines. ......................................................................................................................... 69 3.4.5. Embedded thermal capacity ............................................................................................................... 69 3.5. DEMAND RESPONSE 72 ............................................................................................................................. 3.6. OVERVIEW OF GENERATION CAPACITY 75 ............................................................................................. 3.6.1. Summary of projected medium-term trends ......................................................................................... 75 3.6.2. Changes in generation capacity forecasts relative to the 2015 Generation Adequacy Report ................... 77 4 4. FORECASTS FOR EUROPE 79 . ...................................................................................................................... 4.1. POWER DEMAND TRENDS IN EUROPE 80 ....................................................................................... 4.2. TRENDS IN GENERATION CAPACITY IN EUROPE 85 ..................................................................... 4.2.1. Renewable energies ........................................................................................................................... 85 4.2.2. Nuclear power ................................................................................................................................... 87 4.2.3. Fossil-fired capacity. ........................................................................................................................... 88 4.3. INTERCONNECTION CAPACITY AT FRENCH BORDERS 91 .......................................................... 4.3.1. Current use of interconnection capacities. ............................................................................................ 91 4.3.2. Forecast trend in interconnection capacity over the medium term.......................................................... 93 5. ASSESSING RISKS OVER THE MEDIUM TERM 101 ................................................................................. 5.1. SECURITY OF SUPPLY INDICATORS 102 . ............................................................................................ 5.2. SHORTFALL RISK 103 ............................................................................................................................... 5.2.1. Medium-term assessment ..................................................................................................................103 5.2.2. Comparison with the previous Generation Adequacy Report. ...............................................................105 5.2.3. Sensitivity to extreme events .............................................................................................................105 5.3. ENERGY BALANCE ANALYSIS 106 ....................................................................................................... 5.4. SENSITIVITY ANALYSIS 108 .................................................................................................................... 5.4.1. Sensitivity to demand forecasts. .........................................................................................................108 5.4.2. Sensitivity to renewable energy growth forecasts ................................................................................111 5.4.3. Sensitivity to nuclear power forecasts .................................................................................................112 5.5. SHORTFALL ANALYSIS 113 ..................................................................................................................... 5.5.1. Risk analysis for France on a standalone basis......................................................................................113 5.5.2. Contribution of exchanges to preventing shortfalls. .............................................................................113 5.5.3. The shortfall landscape ......................................................................................................................114 5.5.4. Relationship between shortfalls and margins .......................................................................................115 5.6. IMPLEMENTATION OF THE CAPACITY MECHANISM 116 ............................................................. 5.6.1. A market mechanism to improve security of supply .............................................................................116 5.6.2. The mechanism’s influence on the 2017-2020 period. ...........................................................................116 5.6.3. Forward indicators for the capacity obligation .....................................................................................117 APPENDICES METHOD USED TO SIMULATE THE SUPPLY-DEMAND BALANCE 119 . ................... A.1 SECURITY OF SUPPLY AND LOSS OF LOAD EXPECTATION 120 ................................................. A.2 EXPLICIT MODELLING OF THE WESTERN EUROPEAN SYSTEM 121 . ........................................ A.3 PROBABILISTIC ANALYSIS 121 .............................................................................................................. A.4 DRAWING UP LOAD CURVE FORECASTS 123 . ................................................................................. GENERATION ADEQUACY REPORT on the electricity supply-demand balance in France I 2016 EDITION 5 FOREWORD Foreword The year 2016 marks a real turning point in climate waiting to have a better idea of the economic and energy policy. Taken together, the decisions outlook for fossil-fired generation before decid- made during the year will have a lasting impact ing what to do with their gas and coal plants. on security of electricity supply in France. The implications may vary depending on the With energy efficiency gathering so much momen- strategies and generation portfolios of the play- tum, for the first time, scenarios have been drawn ers in question. up calling for a reduction in power demand over the next five years. A decline in consumption in For all of these reasons, RTE has drastically France from 479 TWh in 2015 to 471 TWh in 2021 revised its assumptions about future trends in is now envisaged. Peak demand forecasts follow fossil-fired capacity relative to the 2015 edition. a similar trend. Energy efficiency measures, nota- The 2016 Generation Adequacy Report explores bly in the residential and service sectors, will keep a series of possible trajectories, with high and low demand in check despite a surge in new end-uses scenarios, that reflect the most recent statements for electricity and a more buoyant economic from generators. Projected trends in the different climate. technologies over the next five years, within these “limit” scenarios, have a major impact on the Solar photovoltaic and wind power continue conclusions of the security of supply assessment. to steadily gain ground in France, and a new roadmap prepared in 2016 sets higher targets for Margins available to the French power system 2018 and 2023. show a gap of more than 5 GW between the high and low scenarios starting in the winter of 2017 This is a crucial time for fossil-fired capacity and lasting through 2021. The risk of imbalances given the economic challenges the sector faces. between supply and demand appears to be A number of factors are creating uncertainty for greatest in the winters of 2018 and 2019 under the generators: the absence of end-markets for semi scenario with the lowest thermal capacity (short- base load and peak generation, the lack of visibil- fall of more than 2 GW). ity on how the French capacity mechanism will be implemented given the investigation launched by These elements of analysis shed some light on the European Commission, and the debate under the impact changes in thermal generation capa- way about the carbon price. Some producers are city will have on the power system. GENERATION ADEQUACY REPORT on the electricity supply-demand balance in France I 2016 EDITION 7 GENERATION ADEQUACY REPORT on the electricity supply-demand balance in France I 2016 EDITION PART 1 Framework RTE que diathè and objectives of Mé © the Generation Adequacy Report 1.1 1.2 1.3 Background Objectives of Disclaimers the risk assessment PART 1 Framework and objectives of the Generation Adequacy Report 1.1. Background 20161. These reports are among the documents used by the Minister for Energy and, more generally, public authorities, As stipulated in French law and recently reaffirmed in the to establish multiannual energy programmes. energy transition law for green growth, RTE periodically establishes multiannual Generation Adequacy Reports This document also presents the results of the risk assess- on the balance between electricity supply and demand in ment entrusted to RTE in article 24 of Decree 2012-1405 of France, working under the aegis of public authorities. 14 December 2012 concerning the contribution of suppliers to security of electricity supply and calling for the creation of The framework, scope and study horizons of Generation a capacity mechanism in the electricity sector2. Adequacy Reports were specified in the Decree of 24 March + “NETWORK OUTLOOK COMMITTEE” The “Network Outlook Committee” is a commit- tee of the Transmission System Users’ Committee (Comité des clients utilisateurs du réseau de trans- port d’électricité – CURTE) that meets periodically to organise broad consultations on medium- and long- term issues facing the power system. In addition to economic actors from the power system (generators, traders, marketers and consum- ers), the committee brings together representatives of non- governmental organisations, operators of linear infrastructure and institutions. Issues addressed by the committee relate to the European objectives of steadily reducing carbon footprints, ensuring security of supply and build- ing the single market. Country-specific issues and debates are also taken into account. Since its crea- tion in 2011, the “Network Outlook Committee” has been the main forum for debating the assumptions about demand, demand response and generation To find out more about the consultations incorporated into Generation Adequacy Report organised by RTE, please see: scenarios. https://cpr.concerte.fr/ 1 https://www.legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT000032294009&categorieLien=id 2 http://www.legifrance.gouv.fr/affichTexte.do?cidTex- te=JORFTEXT000026786328&dateTexte=&categorieLien=id 10