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French ministry rejects industry call for Arenh extension

(Montel) France’s energy ministry will go ahead with plans to replace the Arenh regulation by the start of 2026, despite industry calls to extend it until the beginning of 2027, a ministry official said on Tuesday.

“We expect to reach an agreement in time,” Timothee Furois, energy markets deputy director at the French energy ministry, told the Europ’Energies Forum in Paris.

The Arenh mechanism, which forces EDF to sell up to 100 TWh of its annual nuclear output to rivals at EUR 42/MWh, is due to expire at the end of 2025. 

Yet, its successor hinges on EU discussions regarding power market reform, which leaders hope to agree on by the end of this year.

Tight deadline

Given the tight deadline to replace Arenh, power suppliers Engie, GazelEnergie and the French subsidiary of Swedish utility Vattenfall urged the ministry to extend the regulation until the start of 2027.

“It is obvious to us that finding a solution by the end of the year will be difficult,” Henri Reboullet, managing director France at Vattenfall, told the conference.

“Our customers don’t know how to implement hedging strategies from 2026 onwards,” said Jerome Wolff, GazelEnergie’s sales and energy management director.

Indeed, extending the current system was the “simpler option”, said Dominique Jamme, managing director of France’s CRE energy regulator.

Yet, France’s dominant power producer and supplier, EDF, wanted an end to Arenh, said Nelly Recrosio, an account director at the firm.

“We want to offer long-term contracts to large industrials based on the [nuclear] fleet’s output,” she told the conference.

Some of EDF’s rivals in France are firmly opposed to unilateral contracts between EDF and consumers, however, saying they would undermine competition.

“EDF wants to take advantage of this lack of visibility and wipe out its competitors,” Reboullet said.

Call to balance system

Instead, the government should replace Arenh with contracts for difference (CFDs), which would “open [nuclear] power production to all final consumers”, he added.

Frank Roubanovitch, president of CLEEE, an association of large power consumers, said selling nuclear power through two-way CFDs would create a balanced system. 

However, the suggestion of opening CFDs to existing nuclear power plants has pitted France against Germany in the discussion on power marker reform, with Germany saying CFDs would lead to distortions between EU countries.

Last week, another ministry official told Montel that France was considering a combination of PPAs and CFDs depending on different types of power consumers.