France: Energy production mix is changing

France is in the forefront of clean energy production. The country manages to sustain its demand for electricity by producing around 75% of it through nuclear plants, the highest share in the world of the total energy generation. During the last five years, the total production of energy has remained relatively stable, with fossil energy showing minor shift down. Every day, the production of wind energy and the production of solar energy follow opposite direction, with wind energy being produced more at nights.

France is number two in the world in producing nuclear energy, right behind the U.S. and ahead of Russia and China. If comparison were in terms of nuclear share on the total domestic electricity generation, France has by far the highest percentage portion of any country in the world. However has the total energy consumption increased? What are the main sources of energy in France and how have their portions changed across time?

In our last report we inspected energy consumption in France and found that electricity consumption has increased during the past five years. Around 75% of electricity comes from nuclear energy, due to a long-standing policy based on energy security. In 2015, 15% of electricity came from renewable energy, and therefore 90% non-fossil, non-CO2-emitting energy. Government policy is to reduce nuclear to 50% by 2035, in an effort to increase renewable energy portion.

French production of energy is mainly controlled from ENGIE and EDF, the two largest producers, and some smaller providers that are mainly focused on renewable energy. ENGIE and EDF were state-owned until late 2006 and the government has a large say in their management. Respectively, it currently owns more than 30% of ENGIE’s capital and 85.3% of EDF’s capital.

Interestingly, due to high regulation and governmental intervention in the market, energy efficiency has increased in the past yeas and total production per capita has slowed down. According to the International Energy Agency, the production of primary and secondary oil has decreased by 25% since 2005. As of 2014, natural gas production has experiences a sharp fall and its levels are now incomparable to what they were.

France produces more energy than it consumes. The figure below shows that France consumes almost 1.5 billion MW a year while it produces more than 2 billion MW. However, in our consumption estimates only electricity and gas are calculated.

If we zoom in the production part, fossil and nuclear energy account for the highest portion. There seems to be little variation with the production of these two energy sources. In 2016, nuclear energy declined by almost 8% and remained at those levels ever since.

Clean energy production has showed substantial increase since 2013. In 2018, wind energy has almost doubled and solar energy more than doubled since 2013. This shows the continuous efforts of the French government to move towards clean sources by 2040.

Moving forward to monthly volatility:

During winter, while temperatures decrease and demand for energy increases, the production of energy follows along. However, the overall total production shows less volatility than consumption. In the summer, the total production decreases with 35% while consumption by about 50% in the case of electricity, and 80% in the case of gas.

Zooming in, we see the seasonal fluctuation of solar energy and that of wind. As expected, the highest production of wind is in the stormy season of winter, and the highest production of solar energy is during sunny summer.

Production is higher during daily hours but the difference is not substantial with the night time production. The gap between day and night total production is only 15%.  

Solar energy shows an inverse U-shaped distribution throughout the day with the most energy being produced during light hours. During night time, solar panels require energy stored from during day time as their energy production reaches negative levels. The production of wind energy is highest during night time. 

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France: Energy consumption doubles in winter.

Historically, energy consumption in France has been dependent on coal and oil. Since 1970s gas consumption has tripled, only to slow down during the late years. Increase in energy efficiency, market dynamics and regulation have changed the shape of the pie in the energy market. Electricity, which is mainly sourced from nuclear plants, is the primary source of energy and its consumption is less volatile throughout months. In July, the consumption of gas is 20% of gas consumption in January, while electricity consumption is half of what it is during January.

Introduction

France is the country with the largest share of nuclear electricity in the world. Its electrical grid is part of the Synchronous grid of Continental Europe and the country is ranked among the world’s biggest net exporters of electricity. According to Planet Energies (2018), during 1973 and 2015 oil consumption fell by 35%, while gas consumption almost tripled. How has the consumption of electricity and gas changed during the past five years in France?

In 2015, primary energy consumption in metropolitan France broke down to 42% nuclear, 30% oil, 14% natural gas, 9.4% renewable energy and 3% imported coal. (RTE Results, 2017).  France’s energy landscape has been shifting constantly for a while, with core inputs shifting one another throughout time.

Historically, coal and oil were the two main forms of energy sources. Until 1970, the majority of energy consumption was supported solely from these two sources. However in late 1970’s, the energy structure underwent a profound transformation with the large-scale development of nuclear energy. In 1990s natural gas dominated the energy production and the consumption followed along.

Until 2005 energy consumption rose gradually for both gas and electricity. Changes in economic activity and improvements in energy efficiency eased down consumption. Today, the country is experiencing a fresh transition to clean sources with the development of renewable energies and the implementation of policies aimed at reducing greenhouse gas (GHG) emissions. France plans to reduce the share of nuclear to 50% in the electricity mix by 2025.

Mainly energy consumption is split in three major sectors: The first and most important one is residential and tertiary consumption which accounts for about 45% of the total share.

Transportation is second with 33% of the share. This share increased since 1990s when it was around 20% of total consumption, only to decrease at the later years due to changes in regulation and energy efficiency. According to the National Statistics office of France, petroleum-based fuels remain largely dominant in transport.

Thirdly, industry is the sector where the drop in energy consumption until 2015 has been the most remarkable. The sector faced broader developments which shifted from the predominant use of oil and coal to the growing use of gas and electricity over the period. As with gas, the growth was sharp during 1990s, and it slowed down during recent years.

The 2016 International Energy Agency review of France’s energy policies highlights and several areas that are critical to the success of the energy transition. For example, planned growth of the share of electric vehicles and renewable electricity will require enhanced power system operation and flexibility, including demand-side response, smart grids and metering, and more interconnections.

Data and Insights

Following the claims that regulation changed the shares of energy consumption in 2015, total gas consumption saw a sharp increase a year later in 2016. Even though on average, electricity consumption counts more than twice as that of gas, its drop in 2014 was quite sharp.

Looking at regional differences, gas consumption shows three peaks in Grand-Est, Hauts de France and the main economic region Ile de France. Yearly consumption in these regions amounts around 80 million MW. Compared to other regions in France, this amount is almost double.



Monthly data on gas and electricity shows that the seasonal consumption of both these energy sources is highest during winter time when it’s colder and daylight is limited. Areas with highest economic activity like Ile de France show less volatility due to high dependence on these sources.


Gas consumption shows higher monthly volatility than that of electricity, as it is the main source of heating, which is highly dependent on temperature. Electricity usage increases during winter at a slower pace as its consumption is less dependent on weather. The figure below shows this relationship on monthly average terms. During July and August, both electricity and gas are at its lowest levels while temperature is at its highest.

On average, daily consumption of gas in France is 1,303 GB of gas and 2,516 GB of electricity. On average, if daily temperature increases with 1 °C total average consumption of gas decreases with around 84 GB and the consumption of electricity decreases with 60 GB.

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Winters Have Become The Most Unsafe Times, But Why?

On Friday, August 31st a stabbing attack occurred at Amsterdam Central Station. Two people were reportedly injured and police forces shot the assailant and took the two victims and the suspect to the hospital. How unsafe has The Netherlands become? Are some months more dangerous than others?

Safety is vital to our well-being. We all want to feel safe in our home or work and would like to live in crimeless neighbourhoods or cities. Unfortunately, that is not always the case as some parts of our surroundings have a higher crime rate than others and some months are more dangerous than others.

The following data comes from private and public source. The safety score index is built up from a mix of burglaries, CBS data and nuisance reports and it ranges from 0 to 10. The data is collected since January 2018 and does not inform us about the long-run movement of the safety score.

Figure 1: Average safety score in the Netherlands since January 2018 until September 20181 b

It is startling to see in Figure 1 that the average safety score is higher in the summer than it is in the winter. This might be explained  from different viewpoints. First, as seen from our report, the Dutch fly much more during summer as they take their holidays around July and August. That means that a big majority of residents are away from home and report less noise complaints from tourists which puts the index up by  0.25 basis points.

Secondly, in the summer noisy activities happen mostly outside which in turn leaves less room for the Dutch to complain about their neighbors or the student parties.

Another interesting viewpoint over this data is to see how this score change for the big cities since January. If in the summer, the country becomes safer, is this true for all the provinces and regions? Shouldn’t Amsterdam become more risky during the tourist season?

Figure 2: Safety score movement since January 2018image (28)

Compared to the average score, all large cities score lower in safety. As the Economist put it: In many respects it’s the very success of cities, in their role as global social and economic hubs, that makes them more vulnerable.

Haarlem’s safety score increases as weather gets better. Den Haag becomes safer during the summer months and the score drops back to the normal levels in September. The bigger cities like Amsterdam and Rotterdam get more dangerous with the good weather as more tourists visit. Utrecht loses some safety points during summer and has fewer fluctuations

You Buy Clean, You Pay Green

Going green is what every everyone is talking about.  In the market for cars, this debate is even more heated. The ‘driving green’ popularity has triggered a price growth in the green cars market. Fuel efficient cars are not the cheapest in the market anymore. Interestingly enough, during the last two years, the prices of cars labelled  B through G has decreased, while the price of A labelled cars has increased.

Green driving has never been as popular as it is today. The drivers behind sales growth of green cars are plentiful.

First and foremost, today we care more about the environment than we did twenty years ago. A few months ago, the UK went 55 hours without burning coal, which is something that has not happened since before the Industrial Revolution. Portugal produced more renewable energy in March than what the country consumed in the same month. (Quartz, 2018)

Secondly, car buyers have become more aware that the long run cost of buying a green car is much lower. In fact the greener the car, the lower the variable costs.

As electricity is cheaper than petrol or diesel, for gasoline cars to catch up to electric vehicles, they would have to improve their fuel economy tremendously.

Not only variables are lower, but maintenance costs as well. As the engines are simpler and help brake the car in a much more efficient way, it saves on car braking.

Thirdly, government support for green driving has never been bigger. In the Netherlands, the government has been investing in the infrastructure of charging points and has made switching to driving green less costly through discounts and grants.

Popularity in green driving was followed by a spectacular price increase. The reason is quite simple: when demand pulls, price follows.  And in case of green cars, their price boomed.

Data and Insights

Figure 1 below shows that relative to the rest, fuel inefficient cars have always been the most expensive ones and the price gap increased even more after the financial crisis of 2008.

Figure 1: Price evolution of A through G type of cars sold in the Netherlandsimage (12)

The price increase in G-labelled cars could be explained from premium pricing for luxury cars. The market for these type of cars is more exclusive due to high prices. And as these cars are highly crisis inelastic, the price gap became a lot bigger after 2008.

Since 2015, the prices of B to G type of cars have decreased from 10 to 20%, and the only category which saw an increase was A, the most fuel efficient type.

The figure below shows the percentage increase between 2005 prices and 2018 prices of cars by energy type. The price of A-labelled energy type of cars almost doubled and next in line is the percentage increase are G-labelled energy type of cars. B- through F- labelled cars saw a relatively smaller price increase.

Figure 2: Percentage Change in prices of carsimage (13)

Table 1 gives information about the average price of each energy label since 2005, its yearly price change and sales in July 2018.

Appendix

Table 1: Statistics on energy labels

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Download the full report: You Buy Clean, You Pay Green

Are We Tired of Saving The Planet?

Sales of fuel efficient cars in the Netherlands went drastically up for a short period between 2008 and 2013. A-labelled cars, or the most efficient ones, jumped from 5% to above 60% in the period of 7 years. With increasing fuel efficiency and every new generation of cars being cleaner, new standards were needed. The Dutch relative system of energy labelling ensures that fuel efficiency of a car is compared to that of all cars with the same size. From 2014, more fuel non-efficient cars are being registered every year. As fuel efficiency is increasing and the average CO2, emission is falling, it is becoming more difficult for all new registered cars to fall under the A or B label. This piece is going to look at the forces at work of fuel economy labelling from 2005 until today.

Fuel inefficient cars have become quite popular in The Netherlands during the past four years. Did we just give up on our fight for the environment? Do we care more about the size of our cars? Have taxes on fuel efficiency not helped at all?

Let’s go back in time: In 1999, in an effort to push the environmental agenda further, the EU expanded the labelling of energy-consuming products to passenger cars. Two years later, the fuel energy labelling of cars was introduced in the Netherlands.

How does the labelling work? The new taxonomy grouped the relationship between distance travelled and the amount of fuel consumed by a vehicle in seven categories (A to G). A-labelled cars were the most fuel efficient as they emit the least amount of CO2 per kilometre travelled, while G-type of cars were the last.

However, every member state has autonomy in its exact labelling. The Dutch system of energy labels is one relative system: the label indicates whether a car within its segment is economical or not and it also indicates how economical a car is compared to other cars that are about the same size.

Initially, the range of cars with an A-label was initially small: only 1% or 2% of the car models had an A-label. The share of B-labels varied between 5 and 10%. Since 2008, the range of car models with an A or B label grew rapidly until 2013 and this happened for mainly two reasons.

Firstly, due to the strong influence from the EU with respect to standards for CO2 emissions, car manufacturers supplied more and more fuel-efficient cars in the market.

Secondly, the calculation rules used to determine the energy labels in the Netherlands were relaxed between 2008 and 2013, making car models A and B more available and attractive for buyers.

With the expansion in the shares of A and B labelled cars, a more balanced spreading of energy labels was created. The market share of cars with relatively inefficient labels of D through G fell drastically between 2008 and 2013. The market for environmentally cars was booming, but only for a short while.

What happened?

Technology is helping. Every new generation of cars is more economical and cleaner. By 2013, more than 60% of the cars registered were of type A.

The energy label, however, indicates the economy of a car, compared to the average economy in the whole class. As the cars with the latest technologies are emitting less and less, the average fuel efficiency has improved every year. If there are better performing cars in the basket of the best performing ones, they should be classified differently.

The boost in fuel efficiency required new thresholds for the classification. Until 2013, a car had to be more than 20% more efficient than average to qualify for an A-label, but at the beginning of 2013 that limit has been reduced to 15%.

For the 2014 and 2015 labels, the calculation was done using the average emission applied from sales in the years 2011 and 2012.

Because in the period 2008-2013 the average CO2 emissions per vehicle kilometre of newly sold passenger cars decreased by an average of 7% annually (Dutch Government, 2017), the updating of the reference period is the CO2 reference standard tightened considerably.

This led to the supply of cars with an A or B-label falling in 2014. In 2015, this supply went up again at the level of 2011 and 2012. For the labels of 2016 and 2017, the average emission of the sales in the years 2013 and 2014 was applied. As a result, the CO2 reference standard has been tightened up again and the supply of cars with an A or B label fell.

Not surprisingly, average CO2/km emissions decreased in all countries in 2016, except in the Netherlands, where emissions increased by almost 5% to 106 g CO2/km. (European Environment Agency, 2017)

Data and Insights

Since 2005 until last month, there are on average 465 thousand new cars registered each year in the Netherlands, or around 40 thousand new cars each month.

More new cars are being registered today than there were in the past. In 2017 there were around 575 thousand cars registered, 60 thousand more than in 2016. The impact of the financial crisis is visible in 2009 when sales dropped by 17%.

Figure 1: Cars registered in Holland every year since 2005

Cars Figure 1.jpgNow, the market is growing. Even though we are a bit more than half way through 2018, car sales this year are higher than the post-crisis year of 2009.

Figure 1 shows the exact number of cars being registered by fuel energy label each year. Even in nominal terms, the sharp rise of A-labelled and B-labelled cars during 2008-2013 is obvious. So is the downturn of these numbers in 2014, when the market was shared much more evenly. A higher supply accompanied by higher tax benefits for these type of cars are the main drivers behind this increase.

Figure 2 below shows the percentage of labels A to G from 2005 until 2018. The most fuel efficient new cars (labels A and B) covered around 24% of all cars in 2005 and in 2013 these two labels had the biggest piece of the cake, at around 82%.

Figure 2: Percentage of cars registered in Holland every year since 2005 by fuel energy ratiCars Figure 2.jpg

The basket of inefficient cars also changed in size as the percentage for these labels has increased. For example, for the G-label, up to 2013 a car should have been at least 30% less efficient than average. Since then, it has changed to at least 35%.

Let’s take it further: Let’s make the assumption that D-labelled cars are the cut-off point of fuel efficiency. What happened to the number of cars labelled D to G and most importantly did it grow in relative size?

Figure 3: Number of cars with energy label D-G registered in Holland every year since 2005

Cars Figure 3

Figure 3 shows that, by 2017, the Dutch were buying four times more fuel inefficient cars than they were buying in 2013. However, this does not necessarily mean that there are in total more inefficient cars today than there were in 2013. It means that the average level of fuel efficiency is increasing and label calculations are becoming stricter for the most efficient categories.

In a publication back in the 2014, TNO suggested that in the Netherlands a large number of people drive company cars and it is considered as a job benefit with a limited income tax burden. That means that companies, which are the owners of these cars have little tax incentive to buy fuel efficient cars. Their employees can enjoy their ride to work with comfortable and relatively more polluting cars as the tax burden is so small. It could be one of the drivers why the environmental ogres are increasing.

Figure 4: Percentage of cars with energy label D-G registered in Holland every year since 2005.

Cars Figure 4.jpg

There has also been a noticeable increase of the percentage of “environmental ogres” relative to the size of all cars registered. While, only 6% of cars registered in 2013 was labelled D through G, four years later this increased to 22%.

However, labelling is relative. The picture will definitely change in the coming years. As almost all manufacturers are producing environmental friendly cars, the average emission per car is being pushed down. In two years, labelling will depend on the sales now and the level of emissions now.

If there are again a lot of fuel inefficient cars, the government might relax the labelling calculations accordingly to push more people to buy fuel efficient cars.

Due to the environmental benefits of lower fuel consumption, the Dutch government has been encouraging the purchase of fuel-efficient cars through tax benefits. In turn, this pushed the sales of fuel efficient cars up, but only for a short while.

However, in the Netherlands the labelling of fuel energy is relative: a car could be A-labelled only if it is at least 20% more efficient. As the average level of CO2 emissions went down, the new threshold dropped to 15%. This explains why the share of non-efficient cars went up since 2013.

Lastly, we did not stop caring about the environment, especially after the attractive tax incentives that the government is imposing. It is just becoming more difficult to show that we care more than others.


Download the full report: Are We Tired of Saving The Planet?