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Earlier this month, we provided an overview of the main provisions of the Energy Transition Act.These provisions are likely to directly or indirectly affect businesses. We mentioned the publication of decrees related to the national low-carbon strategy and multi-year energy planning, building construction and renovation, employee travel, and finally, thecircular economy and waste.
In this new article, we provide an update on the new measures concerning:
- 1. Economic mechanisms for energy management in the energy transition,
- 2. Electricity production from renewable sources,
- 3. The reporting of greenhouse gas (GHG) emissions
1. Economic Mechanisms for Energy Management in the Energy Transition
Electro-intensive and gas-intensive consumers - decrees n° 2016-141 of February 11, 2016 and n° 2016-1518 of November 9, 2016
Eligibility criteria for electro-intensive and gas-intensive consumer statuses have been established, as well as the procedures allowing eligible companies to benefit from a reduction in electricity and gas transmission and distribution network usage tariffs. The eligibility criteria are based on:
- the ratio between annual gas or electricity consumption and the added value produced by the company or site,
- the degree of exposure of the company or site to international competition,
- the quantity of electricity or gas consumed by the company.
Electricity Consumption Balancing Mechanisms – Decree No. 2016-1132 of August 19, 2016, and Order of December 22, 2015
New balancing mechanisms between electricity supply and demand, designed to ensure continuity of electricity supply, have been defined.
1. Electricity Demand Response
"Demand response" involves temporarily reducing or interrupting the electricity consumption of certain voluntary consumers to manage temporary imbalances between electricity supply and demand. In practice, companies can contract with demand response operators, who are responsible, in particular, for:
- identifying potential consumption reductions during peak periods or grid contingencies
- financially compensating for the demand response actions taken
Demand response can also be integrated into certain electricity supply offers.
2. Interruptibility
The interruptibility mechanism allows the public electricity transmission system operator (RTE) to curtail, within seconds, the consumption of large industrial sites equipped with backup power sources. In exchange for their participation in reducing the risk of power system failure, the sites concerned receive financial compensation, which can be up to €70,000 per megawatt of interruptible power.
The Order of December 22, 2015, details:
- the technical arrangements of the interruptibility mechanism
- the conditions for approval by RTE of sites with an instantaneous interruption profile
- the conditions under which RTE compensates approved final consumers
Energy Savings Certificates (ESCs) – Decree No. 2015-1823 of December 30, 2015
As a reminder, the ESC scheme primarily concerns energy suppliers (electricity, gas, LPG, heat and cold, domestic fuel oil, and automotive fuels) who are subject to energy saving obligations over multi-year periods.
To meet their obligations, energy suppliers must implement energy saving measures for consumers. In return, energy saving certificates are issued to them.
Consumer companies thus have the opportunity to form partnerships with energy suppliers to carry out energy saving actions that can be valued in the form of EECs. The process for obtaining EECs during the 2015-2017 period, particularly the categories of operations eligible for EECs, is defined. Standardized energy saving operations that can be carried out on industrial sites are still included (e.g., heat recovery system on a refrigeration unit, low-pressure screw or centrifugal air compressor).
2. Electricity generation from renewable sources
Several provisions related to electricity generation from renewable sources create new opportunities for companies embarking on such an approach.
Authorizations to operate a renewable electricity generation facility - Decree No. 2016-687 of May 27, 2016
The thresholds allowing renewable energy electricity generation facilities to be deemed authorized under the Energy Code without requiring any administrative procedures have been raised:
- Photovoltaic, Animal or plant biomass, Biogas, Geothermal: authorization without procedure for installations with power < or = to 50 MW, compared to 12 MW previously.
- Wind: authorization without procedure for installations with power < or = to 50 MW, compared to 30 MW previously.
For facilities whose capacities exceed these thresholds, the decree also simplifies the content of the authorization application file and the administrative procedures to be carried out.
Purchase obligation and remuneration supplement - Decree No. 2016-682 of May 27, 2016
The conditions under which renewable electricity generation facilities can benefit from the new remuneration supplement scheme and continue to benefit from the purchase obligation scheme are specified. The remuneration supplement is an alternative mechanism to the purchase obligation created by the LTE. It involves selling electricity generated from renewable sources directly on the market, in exchange for a premium payment from EDF.
The purchase obligation scheme, which predates the LTE, allows renewable electricity generation facilities to sell the electricity produced to EDF under regulated tariff conditions. Several new features are introduced:
- certain facilities can benefit a second time from a purchase obligation contract. A condition: carrying out an investment program on this facility
- the main facilities eligible for the remuneration supplement scheme are determined:
- the procedure for benefiting from the remuneration supplement, as well as its coordination with the purchase obligation, are defined.
3. Greenhouse gas (GHG) emissions reporting
Extra-financial Reporting - Decree No. 2016-1138 of August 19, 2016
The "significant greenhouse gas emission sources generated by the company's activity, particularly through the use of goods and services it produces" are included in the information that must appear in the extra-financial report of all relevant companies (listed/unlisted on the stock exchange).
The inclusion of data concerning indirect greenhouse gas emissions produced upstream and downstream of activities (Scope 3) becomes, in principle, mandatory from the financial year ending December 31, 2016.
GHG Emissions Assessment - Ordinance No. 2015-1737 of December 24, 2015, Decree No. 2015-1738 of December 24, 2015, and Order of January 25, 2016
The following changes have been made:
- the update frequency for greenhouse gas emission assessments changes from 3 to 4 years. Objective: to align with the frequency of regulatory energy audits
- failure to complete the assessment is punishable by a fine of €1,500
- the assessments must be published on an IT platform administered by ADEME
- company groups now have the option to establish a consolidated GHG assessment for all their companies. These companies must share the same level 2 French Activity Classification (NAF) code.
Ultimately, around thirty measures from the Energy Transition Law for which the implementing decrees have not yet been published remain. Among these, the draft decree concerning obligations for energy performance improvement works in existing tertiary sector buildings is perhaps the most anticipated.
As a reminder, in application of Article L. 111-10-3 of the Construction and Housing Code, existing tertiary sector buildings must undergo energy performance improvement works by January 1, 2020, and then every 10 years until 2050. The performance level to be achieved will be strengthened each decade, to achieve by 2050 a reduction in final energy consumption of at least 60% compared to 2010, across all concerned tertiary buildings. The announced decree must set out the terms of application for this obligation by the 2020 deadline.
Another important deadline in preparation is the thermal regulation (RT) 2018, which will aim for the development of positive energy and low-carbon buildings. To best prepare for this new regulation, the "energy-carbon" label has already been launched since September 2016.
In conclusion: Energy Transition
If the energy transition is necessarily a long-term undertaking, spanning several decades, the adoption of over 80% of the law's implementing decrees less than sixteen months after its publication already represents a significant first step. However, despite this extensive regulatory work, uncertainties persist regarding the achievement of the ambitious objectives of the energy transition law. This is due in particular to a first Multi-year Energy Programme (PPE) published that is partly inconsistent with these objectives and immediate application measures with still limited effects.