Backup power for Europe - part 7: Conditions for BESS in France are improving

In the first article in this series on BESS in Europe, France did not stand out among the other European countries in terms of market attractiveness. In particular, the lower penetration of wind and solar in the French electricity system implied a smaller role for BESS projects compared to the other countries we studied. However, this does not mean that there are no opportunities for successful BESS projects in France. Furthermore, as the energy transition unfolds, many conditions can change – and shifts are indeed occurring in the French energy system that have made the French BESS market more appealing than we judged earlier this year. In this report, we analyze the latest developments affecting the attractiveness of the French BESS market.

France’s power system is unique in Europe. In 2024, 69% of its electricity generation came from nuclear power, while wind and solar PV together contributed just 13%. In comparison, in Germany, wind and solar PV accounted for 50% of domestic electricity production. While France’s focus on nuclear ensures a very low-carbon electricity mix, it also results in lower volatility – one of the key drivers of battery storage economics in other markets. In addition, France’s hydropower capacity totals 25.4 gigawatt (GW), including 5GW of pumped hydro storage. The combination of firm nuclear generation and dispatchable hydropower has resulted in lower flexibility needs than in countries like the UK and Germany.

As a consequence, France’s installed grid-scale BESS capacity remains small compared to countries like the UK, Italy, and Germany, which have similar levels of electricity demand. According to the European Commission, France currently has 400 megawatt (MW) of grid-scale BESS capacity installed, with another 760MW in the pipeline – 360MW of which is under construction. Interestingly, around 600MW of distributed energy storage, installed at electric vehicle charging stations, is also connected to the French grid. The map in figure 2 illustrates that the French grid-scale BESS market is still in its infancy. Most operational projects are small in terms of power output and are limited to only one-hour duration. Although projects in the pipeline are increasing in size, only a handful are under construction or have been announced. The largest of these is the 240MW, two-hour duration battery storage project by TagEnergy in the north of France.

Despite France’s focus on nuclear and hydropower as low-carbon technologies, solar PV and wind generation capacity are set to grow significantly in the coming years. In its latest National Energy Climate Plan (NECP) from 2024 , the French government set targets to increase installed wind capacity by roughly 50%, and solar PV capacity by roughly 200% by 2030. Meanwhile, hydropower and nuclear capacity are expected to remain stable. This increase in intermittent renewable capacity will have a substantial impact on the grid, especially during sunny and windy periods. We expect that the growth in renewables will boost flexibility needs in the French electricity system, creating more demand for BESS.

Over the past two years, the increase in renewable energy capacity has led to a surge in curtailment. In 2024, 1.7 terawatt hours (TWh) of renewable energy was curtailed – up threefold from 2023. The number of negative price hours also doubled between 2023 and 2024 and continued to rise during the first eight months of 2025 (see figure 3). As the growth in wind and solar capacity typically outpaces grid upgrades, we expect the number of negative price hours to increase further. During these hours, producers must pay to supply electricity to the grid. Negative price hours typically occur when there is an oversupply of renewable energy during periods of low electricity demand. Most new solar and wind projects in France operate under a contract-for-difference (CfD) support mechanism, which incentivizes curtailment when prices fall below zero. As a result, there is a risk that a vast amount of low-cost renewable energy does not get utilized. Increasing the energy storage capacity can contribute to improve renewable integration by shifting generation from wind or solar to peak demand hours.

In figure 4, we illustrate how the expected increase in solar and wind capacity could impact dynamics in the French power market. The first two charts show the average electricity generation mix over the course of a day in 2020 and 2024, respectively. These highlight the growing share of renewables – particularly solar – in the mix.

The third chart presents a projection for 2030, assuming the wind and solar targets outlined in the French NECP will be realized.[1] This scenario has important implications. Based on the expected load curve (in green), which reflects a 5% increase over 2024 levels, daytime electricity generation would exceed demand. Because nuclear power plants have limited flexibility to adjust output, this oversupply could lead to more frequent negative price hours and hence curtailment of renewable energy.

This projected surplus of renewable generation introduces a case for energy storage. Batteries could help smooth out the solar energy peak, reducing curtailment of renewables and allowing nuclear power plants to operate within their technical constraints.

[1] For the expected generation, we assume that wind and solar maintain their 2024 capacity factor.

In the European context, the revenue potential for French BESS has so far been moderate. France’s nuclear-heavy generation mix results in relatively stable wholesale prices and lower demand for balancing services. This has led to fewer arbitrage opportunities and lower ancillary service revenues compared to, for example, Germany and the Netherlands. However, thanks to the growth in renewable capacity – likely to increase price volatility – and ongoing reforms to balancing services, the revenue potential for French BESS is increasing.

Day-ahead prices are becoming more volatile

Compared to the other countries we have examined in this series, France currently offers moderate – but growing – energy arbitrage opportunities. Between January 2024 and August 2025, price spreads on the day-ahead market have roughly doubled. With further solar PV buildout projected, volatility – and therefore also day-ahead price spreads – is likely to increase or at least remain at current levels. Combined with decreasing battery capex costs, this signals improved market attractiveness for French BESS.

The French intraday market is still relatively small compared to Germany’s. However, as renewable generation grows, more trade volume is expected to move from the day-ahead to the intraday market, leading to more energy arbitrage opportunities for BESS in the future.

Revenue potential from ancillary services also looks promising, mostly thanks to a reform of the automatic Frequency Restoration Reserve (aFRR), also known as the secondary reserve. Revenue opportunities from the primary reserve, the frequency containment reserve (FCR), will likely remain stable.

Since 2022, French FCR prices have been significantly lower than those in Germany and the Netherlands. While still below the price levels in those countries, French FCR prices in the first eight months of 2025 have doubled compared to 2024. According to the French transmission system operator (TSO), RTE, 500MW of batteries were certified to provide FCR by the end of 2023. As this is roughly equivalent to the total FCR demand in France, it suggests that – like in many other countries – the FCR supply is nearing saturation due to battery capacity. This makes a further substantial increase in FCR prices unlikely.

Regarding the aFRR market, several relevant developments have taken place. First, in November 2023, aFRR energy procurement transitioned from a fixed-price regulated service to a market-based model. Then, in June 2024, aFRR capacity changed to an open-market, auction-based service. And as of April 2025, France joined PICASSO (Platform for the International Coordination of Automated Frequency Restoration and Stable System Operation), allowing for cross-border aFRR balancing.

These changes have increased the revenue potential of the aFRR balancing service (see figure 7). On the aFRR capacity market, both prices and volumes have significantly increased over the past two years. So far in 2025, average prices and volumes have been even more attractive than those in the Netherlands, especially for downward capacity.

France’s unique decentralized capacity mechanism lacks stability

In most countries, capacity mechanisms provide a stable and guaranteed revenue stream from the TSO for making capacity available on the grid. In the UK and Italy, for example, the TSO auctions capacity contracts, awarding payments to projects with successful bids based on their (derated) capacity for up to fifteen years.

France has a capacity mechanism in place, but it operates differently from those in other countries. Instead

of paying producers directly for the capacity they bring online, the TSO issues capacity certificates annually to producers and demand response parties whose assets have been certified. BESS project owners are required to obtain certification for their assets. Awarded parties can then sell these certificates on an open market to suppliers. These suppliers must acquire enough certificates to meet their regulatory obligations for ensuring security of supply during France’s winter peak demand (November to March). Sales can take place through EPEX or bilaterally. Although this mechanism does generate an additional revenue stream, the income is neither stable nor guaranteed, unlike typical capacity mechanisms. For example, in April 2024 the price was EUR 2,000 per 0.1MW certificate, but by May 2025, it had dropped to EUR 365 per certificate.

Reforms toward a centralized capacity mechanism are underway

RTE acknowledges the limitations of the current capacity mechanism and is hence planning to introduce major changes starting with the winter delivery period of 2026-2027. The main objective is to simplify the process and create clearer price signals. The most important change will be the centralization of the mechanism, with RTE becoming the purchaser of the capacity certificates. This shift would bring the French system more in line with those used in the UK and Italy. Clearer price signals will result from new T-4 auctions, in which projects can bid for multi-year contracts four years before the delivery period – again similar to the mechanisms in the UK and Italy.

For potential BESS investors, staying informed about the redesign of the capacity mechanism is essential, as many details remain unknown. The period up to 2030 will be transitional: the current mechanism will run until March 2026, and T-4 auctions will not take place before 2030. Between 2026 and 2030, RTE intends to hold yearly auctions in the fall for delivery in the following winter.

RTE recognizes the battery’s role in the grid

The expected rapid expansion of renewables, combined with growing electrification of demand, is putting pressure on France’s electricity grid. While RTE’s strategic development plan for the French transmission grid (SDDR) outlines a EUR 100bn investment plan over 15 years, investments in the transmission grid alone may not be enough to keep pace with the energy transition. The French Energy Regulatory Commission (CRE) is currently reviewing the submitted plan and has already expressed general support for its main components (in French).

BESS projects can offer local flexibility solutions to relieve grid constraints, in particular in regions with high solar development. However, there is currently little incentive for batteries to be located where they would deliver the most value or to be operated in ways that reduce congestion management. The SDDR proposes a targeted approach to attract more energy storage facilities: a contractual operating range framework for storage assets. Under this model, batteries would commit ex ante to specific operational behavior, such as avoiding injection during peak solar hours in congested zones. According to RTE, this approach would align battery operations with grid needs, reduce congestion costs, and optimize renewable integration. Coupled with updated tariff structures and regional grid planning, RTE estimates that this framework could avoid up to EUR 500m in grid investments over the 15 years covered by the SDDR. The implementation of such a framework would improve the attractiveness of France’s regulatory environment for BESS. However, these contractual operating range requirements for storage assets could impact potential returns for BESS projects.

Although BESS projects might provide solutions for grid constraints, deployment of new projects still face grid congestion. As illustrated in the map in figure 8, the French electricity grid still has room to connect new BESS projects but the majority of nodes already have low or even very low battery connection capability.

TURPE 7: Optional grid tariffs to incentivize BESS operation

Double charging – meaning that a battery must pay grid tariffs for both injecting and withdrawing electricity – has long been a key limiting factor for the French BESS business case. Under the new TURPE 7 framework, which entered into force on August 1,2025, the French energy regulator CRE introduced an optional tariff component specifically for battery systems that both consume and inject electricity. This “injection-soutirage” structure aims to better reflect the operational flexibility of storage and reduce grid-related costs.

However, the reform is not a blanket solution to double charging. The new tariff is transitional and will apply only in selected grid zones, which have yet to be published but will likely be at locations near areas with high renewable generation. As a result, while the regulatory direction is promising, the lack of clarity on geographic eligibility may delay investment decisions. Still, the move signals growing regulatory support for storage, which would bring France more in line with leading European markets such as the UK and Germany, where grid tariffs are more favorable to batteries.

The French BESS landscape is showing many signs of improvement in terms of market attractiveness. Market conditions in both the wholesale markets and ancillary services are improving. At the same time, the French TSO (RTE) and energy regulator (CRE) increasingly view BESS as a solution to grid congestion. Especially grid code updates addressing double charging and reforms to the capacity mechanism aimed at improving stability will positively impact the financeability of French BESS projects.

However, many of these factors remain uncertain. The capacity mechanism will be in a transition phase until 2030, grid tariff reforms may not completely solve the issue of double charging, and – like in other countries –ancillary services may become saturated as more BESS comes online. One fundamental trend that will boost the attractiveness of French BESS is the significant increase in renewable generation and the corresponding need for flexibility.