Cheap electricity in France: Stagnant demand holds back investment

France is entering the second half of the decade in a paradoxical situation. On the one hand, it has relatively cheap electricity, high nuclear plant availability and rapidly growing renewable generation. On the other, it faces long-term stagnant demand, undermining the economic viability of investment in both renewables and new nuclear units, reports Argus Media.

Electricity prices on the French market remain low. In December, the annual contract for delivery in 2026 traded at around 50 euros per MWh, well below 2024 and 2025 price levels. There are several reasons for this: cheaper gas, growing installed solar and wind capacity, and, above all, a return to good operating condition for France’s nuclear fleet after problems in previous years.

State-owned energy company EDF now confirms that it expects high nuclear generation to continue. It estimates output of 350 to 370 terawatt-hours in 2026 and 2027. For the first time, it has also published an outlook for 2028, with a wider range of 345 to 375 TWh. EDF says this is due to growing uncertainty about demand and the need to modulate nuclear plant output—that is, to reduce generation during periods of surplus electricity and very low prices.

Output modulation is already a significant factor. In the first half of 2025 alone, nuclear generation was reduced by 18 TWh. Transmission system operator RTE estimates that by 2030 the volume of electricity not generated in this way could rise to as much as 50 TWh per year. In other words, France has the capacity to generate electricity but no one to sell it to. There are also concerns about whether output modulation could lead to increased wear and tear on some nuclear plant components.

Stagnant electricity demand holds back investment

Electricity demand has remained virtually unchanged in recent years. This is in stark contrast to decarbonisation and electrification ambitions for industry, transport and hydrogen production. Data centre, industrial facility and hydrogen electrolyser projects have reserved up to 30 gigawatts of capacity in the transmission system, but whether they will actually be built remains uncertain.

If all these plans were implemented and operated at full capacity, electricity consumption would rise by 180 TWh by 2030, or around 40%. However, even in its more optimistic scenarios, transmission system operator RTE expects only some of the projects to go ahead and their utilisation to be limited. It estimates that around 60% of the planned projects could be completed, and that they would then use only 20 to 60% of their reserved capacity. In the low scenario, additional demand from these projects, together with the growth of electric mobility, would reach around 2.7 GW by 2030; in the high scenario, it would reach 6.3 GW.

If demand began to grow at a rate of one to three percent a year, it could outpace the increase in solar generation, with several gigawatts of capacity expected to be added each year in the coming years. For now, however, low prices point to the opposite: electricity is plentiful.

This trend has major implications for the future direction of France’s energy sector. Low market prices reduce the returns on new renewable energy projects while increasing the state’s costs of supporting them. Political willingness to continue building at a rapid pace is therefore waning. In its draft new ten-year energy strategy, PPE3, the government has already indicated that renewable energy targets will be revised downwards.

The situation is similarly challenging for nuclear power. EDF has begun preparatory work to build new reactors at Penly and is planning further units, but the experience of the significantly delayed and over-budget Flamanville 3 project has made the government cautious. New nuclear units would also generate electricity at a cost of around 100 EUR/MWh, twice the current market price.