It involves three main activities:
See risk factors 4E – Hydraulic safety violations in the section 2.2.4 “Operational performance related risks”.
Articles R. 214-112 et seq. of the French Environmental Code contain provisions that are applicable to the safety and security of hydropower facilities that are authorised and operated under concession contracts. Dams are divided into three classes (A, B and C) according to their characteristics, in particular their height and the volume of the floodwaters. According to this classification and the legal rules applicable to the facility, the regulations require the operator or concession contract holder to fulfil a certain number of obligations in order to guarantee the safety and security thereof.
Hydropower is a key component in energy transition, due both to the low-carbon nature of output and to its flexibility and storage capacity, which outperforms other energy storage solutions by far. Over and above the production of renewable energy and its expansion, hydroelectric power also plays a major role in managing water resources locally.
In France, hydropower facilities are subject to the provisions contained in articles L. 511-1 et seq. of the French Energy Code. They require concession agreements granted by the State (for facilities generating over 4.5 MW), or an authorisation from the Prefecture (for facilities under 4.5 MW).
Under the French Energy Code, the granting of a hydropower concession is preceded by public notice and competitive tendering in accordance with the terms and conditions set out in the French Public Procurement Code.
In accordance with Article L. 523-2 of the French Energy Code, when a hydropower concession contract is renewed or extended under the conditions provided by articles L. 521-16-2 or L. 521-16-3 of the French Energy Code, an annual concession fee that is proportional to the revenues generated by the concession contract is levied, which is paid in part to the French State and in part to the French département and municipalities through which the waterways used flow.
Hydropower concessions have an initial term of 75 years pursuant to the French Law on 16 October 1919 relating to hydropower use. Most hydropower concessions that expired before 2012 were renewed in terms of 30 to 50 years. However, the French State has not yet renewed 29 concession contracts which lapsed on 31 December 2021, corresponding to installed power of 2,677.4MW. Since their expirythese concessions have fallen under the “rolling delay” situation defined by Article L. 521-16 par. 3 of the French Energy Code as when a concession that has expired but not been renewed is extended under its former conditions until such time as a new concession is granted so as to ensure the continuity of operations, in the meantime.
In this context, EDF is preparing for the renewal of concessions under the legal framework, combining improved energy efficiency, attention to aquatic environments, compensation of the government and municipalities through fees and regional development, while ensuring the safety and security of operations.
Discussions between the French State and the European Commission (EC) to resolve to formal warnings in this respect are ongoing. In the first notice dated 22 October 2015, the European Commission considers that the French State has infringed the provisions of Article 106 section 1 of the Treaty on the Functioning of the European Union (TFEU) by awarding the majority of the hydroelectric concessions in France to EDF and renewing them with EDF as these steps strengthen EDF’s dominant position on the French retail electricity markets. The State replied to this notice, which marked the beginning of an adversarial exchange of positions between the State and the EC, which does not affect the final decision that will be adopted by the EC. As the chief interested party, EDF sent its observations to the Econ 4 January 2016, firmly contesting the EC’s analysis and the grounds for this analysis. EDF has since been involved in certain exchanges between the French State and the EC, particularly to provide technical details on the operation of the French market.
Furthermore, on 7 March 2019, the European Commission sent the French government a second formal notification concerning the renewal of hydropower concessions contracts. Seven other Member States also received formal warnings:Austria, Germany, Poland, Sweden, Portugal, and the UK, with Italy also receiving a second, additional formal warning. More specifically concerning France, the Commission alleged problems with the application of European law concerning public orders to these renewals as well as issues of non-compliance of French legislation governing these renewals with the same European Public Order law.
See also sections 2.2.1 “Market regulation: political and legal risks”, risk factors 1B –"Changes in the legislative and regulatory framework for hydraulic concessions".
The law on combating climate change and strengthening resilience against its effects supplements the provisions of the Multi-Year Energy Programme (PPE) on the development of hydropower exploitation and storage.
EDF is engaging in a development dynamic by aligning itself fully with the goals set by law and by the PPE for hydropower development. The PPE set ambitious goals for the development of hydroelectric power in France, aiming for 1 GW of gravity capacity and 1.5 GW of STEPs (pumped-storage hydropower plants) by 2030-2035.
This goal is being leveraged in a number of ways:
(1) For further details, see the annual report of the Inspector of Hydropower Safety, available on EDF’s website.
(2) Codified in Article L. 511-6-1 of the French Energy Code.
