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SYNTHÈSE DU MARCHÉ

1.1 Definition and scope of the study

Electricity is a form of energy that can be generated in several ways and that provides power to appliances and devices. The market for electricity is organized around four main areas: the production, supply, transmission and distribution.

On July 1, 2007, the French electricity and natural gas markets were fully opened up to competition. This has allowed new players to enter the market and compete with historical leaders, the main one being EDF which held a near-monopoly (some local public companies have nevertheless been allowed to continue to operate as Local Distribution Companies (ELD).

In order to allow free competition, it was necessary to separate the activities. Where EDF was involved from beginning to end in the electricity sector, from production to supply, it was necessary to separate them in order to open up certain parts to competition. From there, 4 activities emerged:
  • the production: the power plants that generate electricity
  • the transmission: the routing of the electricity produced, high voltage
  • the distribution: the second part of the transmission, the low voltage until the distribution of this electricity in the different points
  • sale or supply: the purchase of electricity in bulk and then resale to the various points of consumption

In France, electricity transmission still operates as a monopoly and is ensured by RTE (Energy Regulatory Commission), a subsidiary of EDF. The distribution of electricity is also close to a monopoly because it is essentially ensured by Enedis, another subsidiary of EDF, but also by local distribution companies.

On the other hand, the production and supply of electricity are open to competition. Several companies carry out both activities, such as EDF, Direct Energie and Engie.

The turnover of the French electricity market is increasing even if electricity consumption is stagnating, as well as electricity generation which amounted to 546 billion killowatt-hours in 2019. This is mainly due to a rise in electricity prices. While the opening to competition was supposed to lead to lower prices, rising costs and limited access to raw materials have led to an increase in tariffs.

This price increase is reinforced by the development of green energy and more efficient and environmentally friendly offers. The energy transition has indeed become the central issue of the sector and represents a potential for future growth.

1.2 The world electricity market

The global electricity market is growing structurally, both in volume and value. This expansion is mainly due to the need for electricity, the increase in population, the dynamism of the construction sector and the development of emerging countries.

Indeed, in volume, both electricity generation and consumption have increased these last years. ...

1.3 The French electricity market : a sustained growth

In volume terms, the electricity market in France is relatively stable. In ****, electricity production amounted to *** billion kilowatt-hours while *** billion kilowatt-hours of electricity were consumed.

French electricity capacity, generation and consumption France, ****-****, in billion kWh Source : EIA Revenues from the electrical sector declined until **** mainly due to the combined effects ...

1.4 The effect of the Covid-19 epidemic

As shown below, the Covdi-** epidemic led to a drop in turnover for the sector. This is explained by the unprecedented economic slowdown, which led to a drastic drop in electricity consumption by the tertiary sector and industry. Industry, particularly manufacturing, has seen its consumption fall by almost **%, and by **% for ...

2.1 Customer markets : residential, companies and industries

The sector that consumes the most remains the business and professional sector, followed by the residential sector with nearly **% of final electricity consumption and finally large industry which represents **% of the total volume.

Moreover, whereas the professionals are customers who are connected to the public distribution network for professional use and ...

2.2 Focus on residential demand

The use of electricity

Electricity is used by households to power several appliances. The average breakdown of consumption in France is shown below. It appears that heating, cooling and washing, information and communication technologies and domestic hot water are responsible for the majority of electricity consumption.

Average breakdown of residential electricity ...

2.3 Focus on business and industry demand

In the service sector, retail trade is the activity that consumes most electricity as shown below. In ****, the retail trade sector indeed consumed ** *** gigawatt-hours. The folowwing most electricity-consuming activities are public administration and defence, human health, education, wholesale trade and telecomunications. Economic activities in the tertiary sector that consume the most ...

3.1 The electricity value chain : Generation, supply, transmission and distribution

On the electricity market, four types of players can be distinguished in relation to the main stages that organise the sector :  Electricity generators : They operate nuclear or conventional thermal power plants (***) to create electricity. Electricity suppliers : They buy electricity from generators and sell it to consumers. Transmission system operators (***) : They ensure ...

3.2 Producers and suppliers

Since the French electricity and natural gas markets were fully opened to competition on July *, ****, consumers have been able to freely choose their energy supplier. 

As a result of this opening, non-incumbent suppliers, known as alternative suppliers, have entered the electricity retail market and consumers can choose between two types of ...

3.3 Carriers and distributors

The electricity transmission and distribution segments are each organized as a monopoly.

The electricity transport and distribution network is organised in the same way as a road network with its main roads, secondary roads and interchanges:

the transport network plays the role of a network of motorways and national roads the ...

3.4 The energy transition in France

The main challenge for the players in the sector today is the energy transition, encouraged by the public authorities and public opinion.

The multiannual energy programmes (***), tools for steering energy policy, were created by the energy transition law for green growth. The main objectives include reducing final energy consumption by around ...

4.1 Typology of electricity supply

 Electricity offers are distinguished firstly by the energy source from which it comes. In France, electricity supply comes mainly from nuclear power, which accounted for **% of French electricity production in ****. Breakdown of French electricity generation by source of energy France, ****, in % Source : EIA It also appears that renewables energies are fast-growing ...

4.2 Overview of the various rates on offer

Three main types of tariff can be identified: regulated tariff, fixed price and indexed price.

Regulated tariffs

The regulated tariff is set by the public authorities following a proposal from the Energy Regulation Commission (***), and in August for the kilowatt-hour rate.

Only the historical supplier, EDF, and the local distribution companies ...

4.3 Evolution of tariffs

The pre-tax retail price of an offer, whether a regulated tariff or a market offer, includes :

identical costs borne by all suppliers, such as access to the networks (***) variable costs depending on the supplier: electricity production or supply costs, commercial costs, margin or remuneration retained by the supplier. It is the ...

5.1 Main regulations

Opening to competition

The opening up of energy markets to competition began as early as ****, with the adoption of a first European directive on electricity, followed in **** by a directive on gas. The latest directives, now in force, are Directives ****/**/EC and ****/**/EC of ** July **** concerning common rules for the internal ...

6.1 Segmentation

  • EDF
  • Engie
  • Total Direct Energie

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Analysts

Hugo S.

chargé d'études économiques, Xerfi

Hugo S.

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Mathieu Luinaud

Associate Consultant

Mathieu Luinaud

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Education Formation
Robin C.

PhD Industrial transformations

Robin C.

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Pierre D.

Analyst

Pierre D.

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Arnaud W.
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Ross Alumni Club France

Arnaud W.

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Amaury de Balincourt
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Analyste de marché chez Businesscoot

Amaury de Balincourt

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Pierrick C.

Consultant

Pierrick C.

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Maelle V.

Project Finance Analyst, Consulting

Maelle V.

Héloise Fruchard

Etudiante en Double-Diplôme Ingénieur-Manager Centrale

Héloise Fruchard

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Imane E.

EDHEC

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Eva-Garance T.

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Michela G.

Market Research Analyst

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Azelie P.

Market Research Analyst @Businesscoot

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Cantiane G.

Market Research Analyst @Businesscoot

Cantiane G.

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Jules D.

Consultant

Jules D.

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Alexia V.

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Emil Ohlsson

Emil Ohlsson

Anna O.

Anna O.

Gabriel S.

Gabriel S.