France’s complicated relationship with efficiency

There is minor outrage over the French energy regulator’s decision that Voltalis, a company that installs energy-saving devices in homes, should pay electricity companies for the power it saves.

Voltalis was up in arms over the decision, as was the anti-nuclear power group Sortir du Nucléaire. But it’s not initially clear what the regulator’s rationale for the decision was. From the New York Times:

Cécile George, a technical expert for the regulator, said the decision hinged on how the company would be paid. “Voltalis can’t be a free rider,” she said.

She said the agency still supported the concept of demand management and that it would continue to work with Voltalis on ways to provide real-time demand data.

The story alludes to ‘coziness’ in the electricity sector and the fact that electricity company EdF is 85 per cent government-owned. But would (or should) EdF itself be so opposed to the devices, which carry out the typical ‘smart’ task of switching off devices when grid loads are high? After all, one of the big arguments in support of smart metering, smart grids and device management is that it helps power companies themselves, by reducing the need to build new power plants that are only required for peak times.

That is why many utilities are working with smart meter manufacturers and vendors of software for monitoring electricity use: although it means they use less electricity, it saves them the cost of providing for more expensive marginal power use – and also provides the opportunity to apply more granular tariff rates that change throughout the day.

In France however the electricity landscape is different to many other countries. Its extensive use of nuclear power and cheap electricity bills are defining characteristics, as is the dominance of national champion EdF. In April, a commission set up to promote competition in the retail electricity market and ensure that home users still benefited from the low prices of existing nuclear capacity published its report. One of its recommendations was that the set retail tariffs be maintained, which François Lévêque of the Ecole des mines de Paris criticised on the Energy Policy Blog:

According to commission Champsaur, administered tariffs for households must not be withdrawn because individual consumers are not mature enough and smart metering is still in its infancy. Here, the commission’s reasoning seems illogical and a dead-end. On the one hand, it emphasizes the need to send correct price signals to consumers and to develop innovation in demand management; on the other hand, it supports the perpetuation of tariffs that are both below market price and flat!

Part of the reason for the recommendation, Lévêque says, was to maintain the French people’s support for nuclear electricity. If energy is artificially cheap, incentives to reduce its use are naturally subdued; hence the opposition of the anti-nuclear power group.

But the furore over Voltalis has drawn attention to these more complex aspects of French electricity: the NY Times story notes the French energy and environment minister, Jean-Louis Borloo, responded to the furore by appointing a working group ‘to propose the legal and regulatory changes necessary “to favor energy-saving and respect the interest of all the parties involved”.’

Related links:

Do smart meters actually save energy? (FT Energy Source, 11/05/09)

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