2023: a new balance for the power system, departing from the trends of the last decade
Overview
The year 2022 was marked by three independent and simultaneous energy crises that, combined, placed the French power system under strain: threats to gas supply following Russia's invasion of Ukraine, leading to a surge in prices; a crisis in French nuclear power generation (at its lowest since 1988); and a hydropower generation crisis due to low rainfall (at its lowest since 1976). Despite this very unfavourable context, the French power system showed resilience and managed to avert supply disruption. This can be attributed to the decrease in electricity consumption within France and neighbouring countries, well-functioning exchanges with neighbouring countries in accordance with the rules of operation of the European common market, and the securement of gas supplies.
During 2023, the determinants of security of supply returned to a more favourable situation:
- electricity generation from all low-carbon sources has increased significantly (nuclear power, hydropower, wind power, solar power);
- consumption decreased compared to the previous year, facilitating the coverage of demand, in line with the trend observed in the autumn of 2022;
- price levels decreased both on the spot market and the futures markets, with a reduction of the risk premiums held by market players;
- the electricity exchange balance once again became significantly export-oriented, reaching 50.1 TWh, and France reclaimed its traditional position as the leading electricity exporter in Europe (in volume);
- emissions related to electricity generation reached their lowest level since the early 1950s.
Thus, the power system returned to a situation of equilibrium, in which concerns about security of supply have been largely mitigated. This "new balance" does not, however, constitute a return to the pre-crisis situation, given the substantial evolution in the production of various sources and the consumption structure since the late 2010s.
Detailed analysis
The clear downward trend of French consumption, which began in the autumn of 2022 amid the worsening energy crisis, continued throughout the year 2023. As a result, the volume of consumption (adjusted due to weather variations) for the year decreased by 3.2% compared to that of the previous year, reaching 445.7 TWh.
The total volume of electricity generation increased by 11% between 2022 and 2023 to 494.7 TWh, while remaining below pre-2020 levels.
- The availability of the nuclear fleet recovered during the year, compared to the historically low levels reached in 2022, but it remained significantly lower compared to that of the pre-crisis years. The volume of nuclear power generation rose to 320.4 TWh (compared to 279.0 TWh in 2022 and 394.7 TWh on average between 2014 and 2019);
- The year 2023 was characterised by power generation records for both wind power (50.8 TWh) and solar power (21.6 TWh), which together accounted for nearly 15% of electricity generation, thereby contributing to security of supply and the increase in the supply of low-carbon electricity in France and in neighbouring countries through exchanges. In 2023, France saw record new generation capacity additions for solar power and offshore wind;
- Hydropower generation (58.8 TWh) maintained its position as the second-largest electricity source. Notably, there was a significant recovery compared to 2022, primarily attributed to more abundant rainfall that enabled reservoir levels to remain high throughout the year;
- The simultaneous reduction in demand and the increase in low-carbon production collectively diminished the reliance on fossil fuels, particularly gas (with gas generation decreasing from 44.0 TWh in 2022 to 30.0 TWh in 2023);
- The generation of electricity from coal has reached an unprecedented low and currently holds an insignificant position in the French energy mix (0.17% of French electricity generation in 2023).
Overall, low-carbon sources continued to largely dominate the electricity mix: for nearly twenty years, French electricity generation has been among those with the lowest emissions in terms of greenhouse gases in Europe. This was confirmed in 2023 with nearly 92% low-carbon production. These factors have strengthened the national power system's role as a key contributor to the decarbonisation of Europe’s electricity mix, through the export of a significant share of its low-carbon production.
The increase in electricity generation has led to reduced dependence on imports and increased export volumes: after an exceptional year in 2022, marked by a net import balance (16.5 TWh net yearly imports) for the first time since 1980, France returned to its traditional role as a net electricity exporter in 2023, with a balance of 50.1 TWh.
The easing of pressure on electricity supply had a positive impact on market prices, bringing them back to levels comparable to those seen in 2021. The sharp mismatch between forward prices and market fundamentals observed in 2022, reflecting a risk premium specific to France due to market players' fears about the security of supply (which were disproportionate to reality), gradually diminished in 2023, leading to a convergence between France and neighbouring countries1