ENERGYQUOTE JHA
OCTOBER 2015 EDITION
MARKET INSIGHT
A Unique Perspective
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A Unique Perspective | Market Insight | October 2015 Edition
France approves energy transition and Dutch must get used to low Groningen gas The French National Assembly has finally approved the energy transition for green growth bill, under which reliance on nuclear energy will be reduced from 77% to 50% of power generation by 2025, with nuclear capacity capped at 63GW, and requiring renewables’ share to rise to 40% of electricity by 2030. The new policy also means that EDF must close older reactors in order to bring new ones online. The new unit under construction at Flamanville is currently expected to start up in 2017, which will oblige EDF to shut one of its operating reactors, most likely Fessenheim, by the end of 2016. The bill appears at first glance to be quite revolutionary and somewhat similar in concept and scope to Germany’s energy transition (Energiewende), which it clearly seeks to emulate. But the reality is that it actually puts off hard decisions, including the likely closure of some existing nuclear plants. On gas, the Dutch Government’s recent budget confirmed that a continuation of reduced flows from the Groningen natural gas field is expected. Together with the developments away from Groningen gas in the Netherlands, Germany and Belgium, the days of low calorific gas could be numbered. The impact of the reduced flows alone could be in the region of €3.5 billion, down from €9.1 billion in 2015 to €5.7 billion in 2016. With subdued natural gas prices, the impact could be even more significant. Nonetheless, reduced production from Groningen is widely supported. The importance of Groningen will fall over the years to come, yet these developments are not causing any security of supply issues in the region, as a result of increased use of LNG across Europe and available storage capacity in the Netherlands and Germany, while in the medium term, the Dutch are likely to seek alternative volumes to make up for this.
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