Comment fonctionne le marché de l’énergie en France ?

How does the energy market work?



With the rise in energy prices since the war in Ukraine, many French economic players are suffering from this instability on the energy market. This is also a market that many French people have trouble understanding. So let’s go back to how the energy market works in France.

Who are the players in the energy market in France?

While energy providers like EDF, ENGIE or TotalEnergies are the first that automatically come to mind when you think of energy market players in France, there are actually many types of players that produce, transport, market and distribute electricity and gas to French households.

Energy producers

Electricity producers use nuclear or thermal power plants in France or in Europe, but also renewable energy sources such as wind or solar, to produce energy. EDF, ENGIE and E.on are the main electricity producers in France, although there are other alternative suppliers.

Gas producers mainly exploit underground natural gas deposits. Gas production is almost non-existent in France, which means that there is no real French gas producer and that the gas used is imported.

Energy suppliers

Once the electricity and gas have been produced, they are sold wholesale to suppliers who resell them retail to the French. Suppliers are therefore companies that market electricity or gas to end customers.

These may be historical players, such as EDF or Engie, or alternative suppliers present since the liberalization of the energy market since 2007, such as TotalEnergies, Mint Energie, happ-e or even Eni, among others.

Network managers or distributors

Between the production and the supply of energy, there are transport networks (Réseau de Transport d’Électricité (RTE), a subsidiary of EDF, for electricity and TEREGA and GRTGAZ for natural gas) and distribution networks (ENEDIS for electricity and GRDF for natural gas) which allow the energy to be transported from the producer to the consumers.

While guaranteeing the transmission, storage and distribution of gas and electricity, network operators ensure the quality of energy, but also its continuity. They also intervene in the event of technical problems or to maintain the meters.

Other players in the energy market in France

There are other players that should not be overlooked, particularly with regard to regulation and mediation. Special mention should be made of the public authorities, the Energy Regulation Commission (CRE), national consumer associations or even business mediators and the National Energy Mediator.

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Where does the energy used in France come from?

According to the information site of the national energy mediator in France: in 2021, the electricity produced in France will come from nuclear (69%), fossil fuel thermal (7%), hydraulic (12%), wind (7%), solar (3% ) and renewable thermal and waste (2%) “.

Evolution of electricity production in TWh between 2017 and 2021 – Source: RTE

According to France’s energy balance sheet for 2020 from the General Commission for Sustainable Development, France’s gas was mainly imported from Norway (36%) and Russia (17%), then from the Netherlands (8%), from Algeria (8%), Nigeria (7%) and Qatar (2%) in 2020.

Since the conflict between Russia and Ukraine, France’s energy mix has evolved to depend less on Russian energy sources and to adopt renewable energies more.

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How are energy prices set?

You have certainly noticed that the price of your electricity and gas bill varies often. This is because energy prices are continuously changing based on various factors.

Supply and demand

Any market depends essentially on the evolution of supply and demand.

If the supply is greater than the demand, then the prices will be lower. Conversely, if demand is greater than supply, then prices will be higher due to the scarcity of supply.

Production cost

With electricity, it must be taken into account that there are several wholesale prices and several purchase deadlines whose price varies. Not to mention that the marginal cost of production depends on the source of energy used to produce electricity.

You also have to think about the costs of storage, supply and sale.

Different offers of electricity and gas

French consumers can choose between different electricity and gas tariffs, in particular a fixed price contract, a regulated tariff contract or a contract indexed to the wholesale market price or to regulated prices.

Geopolitical situation

The armed conflict between Ukraine and Russia leads to many uncertainties on the supply of energy from Russia, which tends to increase the price, especially as winter approaches and demand is expected to increase .

State Tariff Shield

The French State has taken certain measures to limit the impact of rising gas and electricity prices on French people, in particular via what is known as the tariff shield.

The latter would have halved the impact of the sharp rise in energy prices in France between the second quarter of 2021 and the second quarter of 2022 according to INSEE.

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Who benefits from the energy crisis?

This energy crisis primarily temporarily benefits companies in the energy sector, which take advantage of artificially high prices and see their profits rise sharply.

Players offering alternative energy solutions also benefit from the situation, since France and many other European countries want to accelerate their energy transition towards more sustainable energies. These green energy producers should be the real winners, benefiting from longer-term investments.

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Image source: Freepik

All of our information is, by nature, generic. They do not take into account your personal situation and do not in any way constitute personalized recommendations with a view to carrying out transactions and cannot be assimilated to a financial investment advice service, nor to any incentive to buy or sell instruments. financial. The reader is solely responsible for the use of the information provided, without any recourse against the publishing company of being possible. The responsibility of the publisher of can in no way be held liable in the event of error, omission or inappropriate investment.

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