PPE 3: Between Ambition and Reality—The Challenge of Implementation

Given the current geopolitical crisis in the Middle East, breaking free from foreign fossil fuel-producing powers is in the nation’s most pressing interest, even beyond the fight against climate change.

That is why, after a delay of nearly three years and amid a politically unstable environment, the release of the Multi-Year Energy Plan (PPE) No. 3 is good news:

1. Planning the decarbonization of our energy system requires a clear and stable course; not constant debate.
2. It remains committed to the deployment of renewable energy, which is necessary to support the electrification of end uses (provided that plans are in place to accommodate the parallel increase in electricity consumption). In practical terms, this means that calls for bids can now be issued.
3. Although electricity has dominated media coverage, this PPE places a strong emphasis on the development of non-electric renewable energy sources (e.g., geothermal energy)

Nevertheless, inconsistencies, unknowns, and operational risks remain.

Production and Consumption: Balancing These Goals

To keep energy prices under control, the PPE aims, in particular, to an energy mix that is optimized from both a technical and economic standpoint. However, consumption targets appear to have been set independently of production targets, and to a significant extent.

Changes in Consumption[1] The energy sector in France is required to comply with the European Energy Efficiency Directive[2] (DEE) as well as the national carbon budget. However, the projected downward trend[3] is not enough to meet the 2030 and 2035 goals. An additional effort—amounting to a 15% reduction—will be necessary by these deadlines.

To do this, a an ambitious, comprehensive policy on energy conservation and energy efficiency is expected of the government: a massive investment plan in rail infrastructure and energy-efficient building renovations; systematically promoting the circular economy (e.g., repairing, renting, borrowing) rather than buying new, flimsy, and underutilized products; encouraging cycling for short distances, etc. Because use less energy means fewer power plants to build and fewer resources to import; it must be the first, fundamental, and indispensable building block of our energy strategy.

At the same time, the Targets for increasing the production of carbon-free energy aim to reduce the share of fossil fuels. This production could account for nearly 75%[4] of our consumption by 2035.

However, Having an abundance of carbon-free energy is not enough to ensure that carbon-free energy consumption will replace fossil fuels. For example, since 2024, France has increased its electricity exports to nearly 90 TWh per year, while at the same time its electricity consumption has remained flat. Beyond production, the issue is therefore also one of planning the change of basis energy-related (e.g., switching from a gasoline-powered car to an electric car, switching from fossil-fuel heating to electric or low-carbon heating). In doing so, the The energy mix then becomes more optimal, thereby avoiding costly overcapacity in production assets.

Focus on Electricity

Green lights for all sectors: a gamble on short-term overproduction.

The trajectory shown by the central scenario of the PPE3 confirms the significant expansion of renewable electricity sectors (with targets similar to RTE's high-growth scenarios[5]). At the same time, the goals for the next 10 years are very optimistic about the nuclear industry featuring:

• an average annual output of 380 TWh, while RTE projects an average annual output of 365 TWh in its latest Forecast Report[6]
• a high target of 420 TWh, while RTE is considering, at best, a scenario of 400 TWh[7]

In the short term, given that France is in excess electricity[8] with a stagnant consumption[9], the power system will continue—if not increase—its overproduction. This which offers the most favorable conditions for electrification and reindustrialization, but Several issues are emerging :

• the cost control for the community : When production exceeds consumption, this automatically leads to an increase in the total cost of electricity[10] (estimated at +10% by RTE[11] (if consumption continues to stagnate), a sign that the system is suboptimal for all participants in the electricity system;
• a financial risk for producers (and the government) : Overproduction leads to a decline in wholesale market prices. Although this situation is favorable for electrification, it undermines (sometimes dangerously) the profitability of producers. The government is also directly affected by the increase in subsidies for the renewable energy producers in question;
• the impact of a greater flexibility in the nuclear power fleet during periods of overproduction and the expansion of renewable energy, particularly with rising operating and maintenance costs for the nuclear sector[12]

The Urgent Need for a Major Push Toward Electrification

These goals of significantly increasing production across all low-carbon sectors require that the challenge of a steady and significant increase in electricity consumption.

However, this consumption has down 5% from 2019. Currently, the trend points to stagnation in 2024–2025. And what should we aim to achieve in the future?

Let's consider the necessary but extremely ambitious trajectory for electricity consumption of the RTE's rapid decarbonization scenario[13]. This should then increase by more than 10% over both the 2025–2030 and 2030–2035 periods. At the same time, the net export balance is expected to decline slightly and approach 70 TWh by 2035.

In other words, the current pace of electrification for major applications is insufficient to absorb the increase in production and decarbonize the French economy to the appropriate level. To achieve this, it would need to be increased by a factor of 2 to 9 in less than 5 years, as shown in the following table.

Spotlight on Onshore Wind Turbines: “Repowering” as a Political Ploy

"Repowering" involves replacing existing wind turbines with more powerful and efficient ones. There are several advantages:

• A "repowered" wind turbine produces, on average, twice as much energy as the previous one
• We may be able to reuse the connection, the foundation, and the mast. All of these resources will be preserved.
• It is all the more accepted by residents because, beyond the fact that they have grown accustomed to it, it provides an opportunity to increase local tax revenue

"Repowering" should therefore be encouraged, but it cannot, on its own, meet the need for increased wind power generation because:

• A wind turbine that no longer receives public support after 15 years is fully depreciated. Its production cost is then around 20 to 30 €/MWh[14]. It's very competitive, so it doesn't encourage immediate "repowering."
• 65% of wind farms installed before 2015 are subject to significant constraints (e.g., proximity to a historic monument, residential areas, or an airfield)[15]. This makes it difficult to increase the size of the wind turbine to maximize the operation's profitability.

Result: Of the additional 9 GW of onshore wind power projected by 2030 under PPE 3, the potential is only 5 GW. And this is merely theoretical, since in practice, only 0.2 GW has been “repowered” since 2018[16].

In other words, to meet this +9 GW target, most of the new capacity will have to come from new wind turbines.

Is this a problem? No, because 77% of French people support wind turbines. Even more so if they live in the immediate vicinity—that figure rises to 87%—and if they are also involved in the decision-making process regarding the location of the turbines, then the approval rate rises to 91%.[17].

Focus on Low-Carbon Production (Excluding Electricity)

Low-carbon heat production targets pose an industrial challenge

The deployment of renewable and recovered energy (ENR&R) for heat production will require annual growth to nearly double over the next decade, with varying rates depending on the sector.

Having exceeded their goals for 2023, Air-source heat pumps (HP) and biogas[18] are growing at an average annual rate of ~10% and ~22%, respectively, between 2017 and 2030. The massive expansion of heat pumps (preferably manufactured in France) is the focus of a specific national plan[19]. As for biomethane, in the absence of a supply source comparable to fossil gas consumption, its development must be approached with caution and focused on priority uses[20]. The high cost of biomethane, with no real prospect of a decline, should in itself serve as a significant price signal.

The geothermal energy and the solar thermal have seen their annual growth rate increase fivefold over the same period, even though these sectors have not met their 2023 targets under PPE 2. This challenge should be addressed through a national geothermal energy plan[21] and solar thermal projects[22]. These initiatives share the common goal of establishing a regulatory framework conducive to development, building the necessary expertise, and documenting and communicating the relevance of these solutions[23].

The heating networks will triple their historical growth rate to reach +10% per year from 2023 to 2030. Maintaining the Heat Fund’s budget at 800 M€ for 2026, the “classification” decree[24], or the CEE connectors for connecting to networks, are positive signs but do not guarantee that the annual deployment rate will triple.

The wood energy did not meet the 2023 targets, but the many projects currently being rolled out should close this gap. The PPE 3 targets are more limited, taking into account resource constraints and the prioritization of uses[25].

These production targets are ambitious and desirable for decarbonization, energy independence, and job creation in France. However, they are based on a significant shift in consumption and, consequently, on the rapid contraction of the fuel oil and natural gas sectors.

Focus on the Residential Sector: Ambitious Energy Efficiency Measures Will Be Needed to Create Opportunities for Low-Carbon Heat Production

Energy-efficiency renovations, electrification, and the expansion of district heating networks are leading to the removal of oil- and gas-fired boilers.

To understand the impact of the low-carbon energy production targets for 2035, let’s translate them into the number of housing units[26]. Of the 32 million heated homes, the number of homes heated by a heat pump would need to increase from 3 million to 16 million, and the number of homes connected to a district heating network would need to increase from 2 million to 7 million, between 2023 and 2035.

In other words, by 2035, the vast majority of single-family homes—where the heat pump is most effective—must do without fossil fuels.

If we are to achieve these goals, this drastic shift must take place and be accompanied by fair and equitable rules (taxes, standards, regulations, incentives) that actively encourage the removal of gas-fired boilers. At this stage, PPE 3 aims for a 20% reduction in gas-fired boilers between 2023 and 2030, and the SNBC aims to phase out fossil gas from buildings by 2050. However, the European Directive on the Energy Performance of Buildings[27] calls for a complete phase-out of fossil-fuel-fired boilers in buildings by 2040. If the 2030s–2040s are to see 8 to 10[28] With millions of gas boilers set to be phased out, it is urgent to make this fact explicitly clear to consumers and industry stakeholders (Purposes of certain “GPEC” actions[29]"of the PPE on the job market).

Conclusion

The PPE sets specific targets for both energy production and consumption. However, it is not the operational plan that comprehensively outlines the measures to be implemented to achieve these targets. It is now important to provide clarity and clear rules—even if they are restrictive—to ensure that regional sectors and stakeholders can meet industrial challenges and that public policies effectively contribute to accelerating the reduction in energy consumption.