2024
Energy Storage Report
Key Regional Markets
France
There are renewed efforts underway in France to expand renewable energy penetration. Legislation was enacted in 2023 to prioritise the renewable energy project pipeline. In taking such steps, the transmission network management would also gradually change. Grid-scale battery storage units are coming to the fore despite a limited market proposition due to the lack of proportional regulations. Though nascent, battery storage is emerging as a critical component of the French energy mix dynamics.
GDP (Current Prices) USD (2022) | 2,780bn |
GDP Growth Forecast (constant prices) (2023-2027) | 1% |
10yr Govt Bond Yield (12-month rolling average) | 3% |
Country Credit Rating (S&P) | AA |
Battery Storage Capacity | 2.06GWh/500MW |
Pumped Hydro Storage Capacity | 101.1GWh/4.94GW |
RE share of Total Electricity Capacity | 44.6% |
Battery Storage Outlook | 1.5GW by 2030 |
Note: Battery Storage Capacity Expressed in GWh assuming an average 4 hours of duration.
Source: IMF, Fred Economic Data, S&P Global, Aurora, Energy Research, Encyclopédie de l’énergie, Ember
For pumped hydro storage: (Encyclopédie de l’énergie, 2021)
Energy Mix and Case for Storage
Led by nuclear energy, the French power generation has a very low dependence on fossil fuels. Hydro and nuclear energy-based generation enable a competitive baseload grid supply. Such a fuel mix also supports decarbonisation. The emissions profile of the French power sector is among the lowest in Europe and overall advanced economies worldwide (Reuters, 2023). In such a backdrop, renewable energy sources (wind, solar and bioenergy) are yet to play a significant role. Such a fuel mix does not impact the country’s energy policy, especially regarding clean energy sourcing.
Capacity: Status and Trend
The French grid-scale storage capacity lags behind European counterparts such as Germany and the UK. The capacity growth has picked up in recent years, reflecting the steps taken in tendering capacity contracts for frequency regulation, among other applications. Estimates from Aurora Energy Research indicate an installed battery-based capacity base at around 500MW by around mid-2023 (Aurora Energy Research, 2023) – representing almost five times the level achieved by 2020. Such a jump in capacity reflects the systemic changes underway in the French energy mix.
Utility-scale storage is a predominant factor in the country’s existing storage market – marking another distinction from other key European markets like Germany or Spain, where the residential segment is the growth driver (due to solar power). The transmission system operator’s role in securing storage capacities through capacity market auctions is critical in shaping the demand for utility-scale storage capacity.
Pumped hydropower capacity has been a traditional energy storage source. The existing installed capacity of 1.7GW (IRENA, 2023) is an essential grid-scale storage option for the operator to deploy for managing volatility. The trend, however, shows a stagnancy in the pumped hydropower capacity base. Without tariffs or other incentives, any significant rise in this capacity is almost ruled out.
So far, TSO’s grid-scale storage capacity requirements have mainly been around the need for network stability. Primarily, the operators provide primary frequency response (stabilisation for frequency deviations generally within 10 seconds). The market expansion will, however, be contingent on a broader scope of opportunity, such as ancillary services for grid management. In this regard, the existing capacity base is constrained for options. For instance, one of the significant battery-based storage operators, TotalEnergies, with 61MW installed capacity, has services limited to primary frequency response.
Policy and Regulation
The basis for energy storage is laid out in the French Energy Transition Law, which mandates the expansion of the share of renewable energy in total power consumption. Specifically, the French Energy Code, which includes regulations related to electricity (its generation and related aspects), also covers energy storage based on batteries or other forms. The storage operators are thus viewed as two-way grid tariffs users, consumers and generators.
The measures on integrating energy storage are primarily led by the French state-owned grid operator RTE. In undertaking its grid management responsibilities, RTE has recently initiated vital steps to enable storage options, especially those based on batteries. One such notable measure is Project Ringo. This EUR80 million (regulator-funded) project involves testing the feasibility of an automated industrial-scale (or utility-scale) battery network. There are three battery storage sites aggregating 100MW, spread across Fontelle in the east of France, Bellac in the west, and Ventavon in the southeast – and are all closer to installed renewable plants.
Project Ringo’s ongoing trial aims to establish the techno-commercial case of a software-controlled battery network system. The objective is to deploy a storage system that could absorb excess renewable energy injected in the grid at a point in time and subsequently deliver such energy at a later time point to meet peak demand. Such a storage system could potentially prevent the need for significant transmission capacity addition if successfully deployed. In terms of technology configuration, this is a pioneering project in automated battery networks.
The TSO’s grid balancing activity underscores the role of storage (among other options) in the power network. Progressively, the grid power balancing market (involving multiple parties on either side of injection and drawal) has been opened for energy storage facilities. Since 2014, storage units (other than hydro) have been permitted to participate in frequency ancillary services. Such participation is limited to the automatic frequency restoration reserve category for now. The latest system balance report shows that about 190MW of battery capacity was certified for the overall frequency containment reserve (FCR) in the ancillary service domain. In January 2024, France’s energy regulator CRE reopened a postponed auction for secondary reserve/aFRR due to an increase in BESS capacity (Energy Storage News, 2024). There are expectations of enhanced participation in battery-based storage in the near term and France should deploy 300MW a year of BESS capacities over the coming years.
Market Developments and Opportunities
The emerging battery storage pipeline is led by utilities and power generation entities seeking a transition from a legacy fossil fuel base. Gazel Energie, the French power generation and distribution entity, is undertaking a project to transform its existing Emile Huchet coal-based power plant. The renewable energy developer Q Energy is constructing a 44MWh at the site (Renewables Now, 2023). Q Energy has a development pipeline worth 400MW within France, indicating the business interest. It also helps that the grid operator’s tenders (also referred to as ‘call for tenders’) seeking capacities for grid flexibility services under a capacity market help create visibility for prospective standalone battery providers (IEA, 2022). RTE’s call for tenders is reserved for new generation and demand response capacities and takes place four years ahead of schedule (RTE, n.d.).
The regulatory framework’s guidelines (French Energy Code, under the Climate and Resilience Act, 2021) that require contracting of storage capacity present a competitive opportunity for standalone battery units (White & Case, 2022). A battery-based storage contract was recently awarded in this regard for public utilities. The renewable energy firm Entech secured a 50MWh battery storage capacity contract in May 2023 (Entech, 2023). The planned capacity is meant for frequency regulation services in the French and European grid networks. More such capacities could be in the offing due to the measures taken in the energy transition. Similar notable capacities commissioned earlier through competitive bidding contracts include 61MWh battery facility commissioned in 2021 by TotalEnergies (TotalEnergies, 2021).
The application of battery units as a virtual transmission asset has been largely theoretical. Its relevance is, however, getting stronger by the day as rising renewable energy penetration brings forth recurring instances of grid curtailment and negative wholesale power prices. Against such a backdrop, RTE’s pilot project, Ringo, aimed at testing battery-based virtual transmission, holds significant promise (Renew Economy, 2023). By the time Project Ringo ends in 2024, it is expected that the French market could make way for battery storage services in frequency control and other grid ancillary services.
While the utility-scale storage sub-segment picks up, residential solar PV installations have a vast untapped potential. As of end-2022, it is estimated that only about 1,000 homes had solar PV systems equipped with batteries (PV Magazine, 2023). The battery-based solar systems adoption is far lower than in other European countries. It could be related to relatively lower energy prices and a lack of incentives. A rise in wholesale power prices could strengthen the case for battery-based solar PV systems.
Outlook
The rapidly rising role of renewable energy in the French energy markets makes grid-scale storage almost an inevitable option. The auction-based route of securing capacities is one avenue. More profound changes to get the capacities would involve changing the power market design to enable multiple revenue streams in battery storage. A study by Aurora Energy Research indicates a 1,500MW worth of energy storage capacity in France by 2030. The capacity growth is tied to the launch of the secondary reserve power market (expected in 2025) and the ongoing rise in renewable energy penetration. Progressively, batteries participating in the French power market may be applicable in the arbitrage role.
With renewable energy integration acting as the only driving factor, the role of storage facilities in the power network is likely to become more critical. One crucial factor in this regard is the transmission infrastructure’s requirement for expansion and refurbishment. About EUR20 billion worth of investment is projected in RTE’s ten-year development plan (2021-2030) to accommodate the transitioning energy mix. Storage facilities will play an essential part in this equation.
The successful integration of energy storage would also hinge on the competing options of nuclear and hydropower in the French energy mix. Both currently play a vital role in the bulk power market, influencing the potential capacity requirement in grid balancing, among other applications. Furthermore, the phase-out of coal-based power plants appears to be a long-drawn-out process, as grid operators and regulators approve extensions to enable grid security. RTE’s network planning projections have indicated the same, emphasising the role of thermal capacities to balance the rise in renewable energy generation – which means a possibly diminished role of grid-scale storage.