Renewable electricity

The renewable energy sector in France is navigating a complex period, marked by institutional turbulence. The PPE3 (Multiannual Energy Programme), initially planned for 2024-2033 and expected to be adopted by mid-2023, remains in consultation at the end of 2024, with adoption now projected no earlier than 2025. This has sparked frustration across the sector, with CEOs of EDF and TotalEnergies criticising investment hurdles caused by excessive administrative procedures and a Renewable Energy Acceleration Law perceived as counterproductive.

In 2025, E-CUBE will closely monitor public policy developments while focusing on a growing imperative: the industrialisation of renewable energy production operations. Historically, operational priorities centred on development, with portfolios reaching hundreds of MW. Today, emphasis is shifting towards efficient operations and ensuring the quality of developed MW. This shift is driven by several factors:

1. Decreased Performance and Scaling Costs:
   Tools and processes designed for small portfolios (e.g., dozens of MW) are now insufficient for portfolios 10 times larger. Resource demands are outpacing portfolio growth, and operational quality is deteriorating (e.g., unutilised energy, unmet contractual obligations, delayed debt financing). Migrating to automated tools to improve productivity is challenging for overstretched teams managing rapidly growing portfolios.
2. Shareholder Pressure: Financial investors in renewable energy producers are scrutinising team growth and relying on difficult-to-interpret benchmarks (e.g., non-comparable portfolios, differing internalisation/externalisation strategies).
3. Portfolio Consolidation: Heterogeneous portfolios, resulting from asset acquisitions or evolving technical standards, complicate operations and exacerbate performance issues.
4. Negative Prices: While plants under remuneration mechanisms are incentivised to reduce output during negative price events, future requirements could extend to plants under purchase obligations. Retrofitting existing plants to comply could necessitate a wave of technical upgrades.
5. Hybrid Operations with Batteries: Falling midday market prices, price volatility, and grid access costs are prompting the integration of production and storage. Operational processes must adapt to this added complexity.
6. Increased Counterparties and Contractual Frameworks: Vertical integration sees producers becoming electricity suppliers, expanding beyond traditional buyers like EDF OA and aggregators to include consumer contracts. Agrivoltaic projects add another layer of complexity, involving multiple landowners with varying contractual clauses.

As independent producers face the risks of being overwhelmed by this complexity, the “start-up mindset” of early years is becoming increasingly unsustainable.

Key questions for 2025 include:

• Strategic: Should producers specialise in certain installation types to simplify industrialisation and achieve scale economies? How should portfolios be rationalised to align with future development priorities?
• Organisational: What role should asset management play between financial and operational management? ow should asset management responsibilities be divided between administrative, accounting, and operational functions?
• Make-or-Buy: Which activities should be externalised (e.g., low-value tasks, oversight of smaller vs. larger plants)? How can external asset management and O&M services be aligned, and what incentive models should be applied for subcontractor performance?
• Processes: How can continuity be ensured between construction, commissioning, and operational phases?
• Tools: Should producers rely on third-party software solutions, despite potential risks like licensing costs or functionality constraints?

The financial resilience of smaller independent power producers (IPPs) was questioned in 2024, raising concerns about long-term financing. While consolidation remains limited (few M&A deals, dynamic competition), the market is evolving toward professionalisation and a landscape dominated by two types of players:

1. Large Energy Companies: Key players include EDF, Engie, TotalEnergies, and Axpo through Volkswind and Urbasolar.
2. Developers Backed by Major Investment Funds: Examples include Brookfield’s stake in Neoen and Ardian’s negotiations to acquire Akuo.Entering the Industrial Era for Renewable Energy Production

E-CUBE has developed strong expertise in renewable energy through its recent projects and the experience of its consultants. We would be delighted to discuss these market perspectives and opportunities with you. Feel free to contact our experts below to arrange a discussion on the topic.