Welcome in France!
More specifically welcome to Ile-de-France, the Paris region. With more than 12 million inhabitants, Ile-de-France is the most densified region in France with a relatively stable population (+0.7%/year in average). It is also the most economically dynamic region, representing 35% of national GDP and mainly driven by service activities 1.
Grand Paris project
As the French economy system is centralized in Paris, the majority of major companies have their headquarters and support functions in Paris or close to Paris. Transportation has been oriented to go through Paris.
In 2007, Nicolas Sarkozy, President of the Republic at the time, launched the Grand Paris project. His objective is simple: \”make the Capital Region a “world-city\”, with the aim of being the display of France and allowing it to keep its rank in the economic competition of the 21st century \”.
The potential of Paris development being very limited due to its density, the main goal of the project is to decentralize the social and economic life (nowadays concentrated in Paris) to revitalize the suburbs. To do this, three areas of development have been defined:
Develop transport infrastructure in the suburbs bypassing Paris
Create innovative clusters in order to create jobs
Establish a public governance of the territory management
The project will run until 2030, a large-scale project impacting all urban infrastructures over a period of 23 years.
Mobility is the major axis of the project, because it is essential to connect competitive clusters, thus creating jobs, thus creating housing needs and boosting the suburbs and having a positive social and economic impact. The aim of Grand Paris was to streamline transport in the suburbs by bypassing Paris and opening up areas with little or no access to them: in 2030, 90% of the region inhabitants should have a station within 15 min by car. 3There is almost everything to do because Grand Paris project is developing new areas where infrastructures are not adapted and with new huge needs in electricity. Let’s have a focus on electrical infrastructures and how are they responding to this challenge.
Two main actors are operating the electricity infrastructures:
RTE is a private company, owned by EDF, in charge of electricity transportation network (High and Very High voltage) over France and is also in charge of balancing and electricity trading. This is a management PPP directly managed by the national government.
ENEDIS is also a private company, owned by EDF, in charge of electricity distribution (Medium and Low voltage). It is also managed through concession models (management PPP) for a duration of 30 years (in most of the case) and managed at a city government level. ENEDIS owns 95% of France cities electricity concessions.
Back in Ile-de-France, the region is the major consumer of electricity in France but is highly dependent on the production of neighbouring regions: only 10% of the energy it consumes is produced locally 2. Electric infrastructure is therefore a strategic issue to ensure the supply of this first-class economic zone moreover with Grand Paris project: RTE estimates that it will have to increase its production capacity by 600 GWh / year between 2015 and 2030. 4Due to its density, new production plants cannot be implanted in the region. Therefore, Ile-de-France region launched incentive subsidies to help self-consumption (solar panel on the roof) and energetic renovation of buildings. Nevertheless it will remain insufficient and many projects, accordingly with the COP21 objectives, arise: offshore wind turbines in North of France, wind turbines in the East (windiest place in France), solar panels in the South… .
Credits: EDPR -2017 / RTE – 2017 / pxhere-2017
These added capacities have a strong impact on infrastructures: RTE needs to strengthen its network to absorb 2,400 MW (consumption peak management). This represents a 30% increase in consumption compared to a trend increase 4. For ENEDIS this represents 4000MW and 20 new source stations to create, including supply of data centres and competitiveness clusters (real economic stakes in the region), planned for 2030. 5
In order to coordinate all these works, the Société du Grand Paris was created in 2010. Its role is to design and develop the overall scheme and infrastructure projects that make up Grand Paris\’ public transport networks and to ensure their implementation.
Electric infrastructures are in support of the services development and the extension of the economic and social fabric. They need to be ready before the construction of the buildings, before the openings of the train station, before the first train test… and so need to be coordinated with other stakeholders in order to plan and prioritize with the resources to the good construction site.
Credits: ENEDIS -2017
Moreover, it generates a lot of work on the public area: network deviation due to new infrastructures (especially transportation and rail tracks to allow access without disturbing traffic) and the connection of the new consumption zones.
And with these works, a number of questions and constraints due to social (impact on citizen today’s life), political (relationship with the local authorities and Société du Grand Paris), technical (impact on the global architecture, maintenance and planning) and economic (need more human resources and more investments) aspects arise. And for each construction site, all these aspects need to be reviewed. ENEDIS has a good experience in terms of managing social and technical aspects, due to years of exploitation. The two other axis are way more uncertain and dependent on relationship with local or governmental authorities.
Economic and political matters
The pricing system of electric distribution and transportation in France is based on a system of national equalization: whatever the place in France, the transport part on electricity bill is the same for everybody. The CRE (Energy Regulatory Commission6) defines this price based on the operators\’ engaged cost and future investments and challenges them annually. The economic challenge of Grand Paris impacts is therefore a negotiation game between CRE and RTE / ENEDIS to reach a balance between the lowest possible rate for final customers and a maximum profitability level for operators, while maintaining a maximum level of service.
Questioning the ROI, assets are amortized over 40 years (rule defined by the CRE). In case of deviation, some infrastructures have been removed before this amount of time, which means a sunk cost for ENEDIS and RTE which impacts the final consumer.
If RTE has a monopoly position with a relation directly with the national government, ENEDIS is engaged with a much larger number of interlocutors: local authorities.
The investments of Grand Paris are political levers for ENEDIS which is strongly dependent on the renewals of the concession contracts. Today, local authorities cannot assume the onerous work to be done in so little time as an infrastructure operator. ENEDIS, by its experience and its finance, is in a position of strength to renew its contracts.
Economics and Politics are closely linked in the context of concessions, one at a national level for the tariff negotiation, the other at a local level for the durability of contracts. With its public service obligation, infrastructures ensure a social equality of access to electricity with the economic constraints endorsed by the consumer.
Grand Paris is a very interesting challenge for infrastructures: they all have to adapt to a major transformation in a dense urban landscape. The issues surrounding the project go beyond the geographical and administrative space of the Ile-de-France: the energy resources of neighbouring regions are exploited and the national government plays a key role in the administration of the project, via the Société du Grand Paris.
The power grid operators have had to set up a specific organization to respond to the changes generated by the project while maintaining the current network management operations but with different issues: these are no longer security issues or response to a structural demand: it is a question of preparing a future with a strong political and economic stake. This is a paradigm shift that needs to be taken into account inside infrastructure operators on how to invest, plan and manage the resources.
1 INSEE website
2 DRIEE IDF – Direction Régionale ett interdépartementale de l’environnement et de l’énergie
3 Société du Grand Paris : https://www.societedugrandparis.fr/
4 RTE website – electricity transportation operator
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