Regulatory notice
Articles R. 214-112 et seq. of the French Environmental Code contain provisions that are applicable to the safety and security of- 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.
Hydro power 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. Hydropower also plays a major role in local water resource management, as was evident during the severe drought in 2022.
Concession renewals
Regulatory notice
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 4.5MW), or an authorisation from the Prefecture (for facilities under 4.5MW).
Under the French Energy Code, the granting of 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 for 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 (1). Most hydropower concessions that expired before 2012 were renewed for terms of 30 to 50 years.
However, the French State has not yet renewed 31 concession contracts which lapsed on 31 December 2022, corresponding to installed power of 3,260MW. Since their expiry these concessions have fallen under the “rolling delay” situation defined 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 (2).
In this situation, EDF operates facilities for which it has a concession by combining energy improvement, care for biodiversity (especially aquatic environments), payments of fees to national government and local authorities, and local development, whilst also ensuring the safety and security of operations.
France has received two formal warnings from the European Commission (EC). In the first notice dated 22 October 2015, the European Commission considers that the French State has infringed the provisions of on 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. In addition, the EC sent a second formal warning to France on 7 March 2019 (3), on alleged grounds of non-compliance with EU public procurement law relating to the renewal of concession agreements.
See also section 2.2.1 “Market regulation: political and legal risks”, risk factor 1B – Changes to the legal and regulatory framework for hydraulic concessions.
EDF has embarked on a hydropower development trajectory that is fully in line with the goals set by law (4). By 2030-2035, the multi-year energy programme (Programmation pluriannuelle de l’énergie, PPE) aims for a 1GW increase in “gravity-based” hydropower capacity and a 1.5GW in pumped-storage hydropower plant capacity.
This goal is being leveraged in a number of ways:
EDF has taken care to ensure the sustainable and shared development of the areas near hydropower generation facilities, which are often rural and sometimes isolated. EDF’s relationship with the localities where it has infrastructures is grounded in its operation as a responsible concession-holder and operator.
EDF’s relationship with hydro power valleys is based on two key factors:
(1) Pursuant to the French Act of 16 October 1919 on the use of hydro power.
(2) French Energy Code, Article 521-16 paragraph 3.
(3) Seven other Member States also received formal warnings: Austria, Germany, Poland, Sweden, Portugal, and the United Kingdom, with Italy also receiving a second, additional formal warning.
(4) French Act combating climate imbalance and increasing resilience faced with its effects.
(5) Pursuant to a provision in the Climate and Energy Act of 8 November 2019 enshrined in Article L. 511-6-1 of the French Energy Code.
(6) In accordance with ordinaryly accepted academic definitions, on the basis of purchases of €458 million made from the French economic sector in 2022, and an indirect employment impact per million euros on 64 economic sectors; based on INSEE economic data.
