2025
Global Power Transmission Report
Regional Market Overviews
France
With almost 90% of the power generation based on renewable energy resources, Denmark stands out as an outlier among countries for its progress in decarbonisation. Its transmission network, with robust cross-border connectivity, has been playing a key role in enabling the energy transition. However, as the renewable capacity addition continues, it still needs expansion and refurbishment. Furthermore, the exceptionally high renewable energy penetration has also exposed the system to the challenges of curtailment, as evidenced by negative prices. The investment commitments are thus about easing the existing bottlenecks as much as it is for the upcoming generation pipeline.
GDP (Current Prices) USD (2023) | 3,053 Bn |
Projected Average GDP Growth (2024-2028) | 1.3% |
10-year Govt Bond Yield (12-month rolling average) | 2.9% |
Country Credit Rating | AA- |
Renewable Energy Share | 16% |
Total Transmission Line Length (Km) | 105,796 |
Transmission Network
RTE is the sole French power transmission system operator, managing a network with voltage levels ranging from 63kV to 400kV. The high-voltage bulk power transmission is predominantly carried out at 225kV and 400kV. RTE’s network is among the most extensive in the European region and also involves sub- transmission networks at lower voltage levels. A majority share of the network is based on overhead transmission lines, though the share of underground lines has been rising.
As of 2023, the ten-year growth in total line length stood at 0.1%, indicating a negligible expansion (RTE, 2024). Strikingly, the recent trend in transmission line length is notable on one major count: It is declining. This is primarily because of the decommissioning of lines reaching the end of commercial life. Other reasons include shifting overhead lines to underground based on local network requirements. The age of the assets is a major factor that appears to outweigh expansion among strategic priorities.
Transmission Line Length
| Year | Underground (km) | Overhead (km) | Total (km) |
|---|---|---|---|
| 2018 | 6,202 | 99,655 | 105,857 |
| 2019 | 6,415 | 99,527 | 105,942 |
| 2020 | 6,665 | 99,382 | 106,047 |
| 2021 | 6,823 | 99,147 | 105,970 |
| 2022 | 7,055 | 98,762 | 105,817 |
| 2023 | 7,349 | 98,447 | 105,796 |
The average age of the transmission network, per RTE’s ten-year network development plan of 2019, stood at 50 years (RTE, 2019). According to RTE, the age of network assets is much older than anywhere else in the European region. Furthermore, after 2030, many of the transmission lines will reach 85 years of age and will be beyond reinforcement and life extension works. Timely replacement of the capacity will be critical not only for service reliability but also to meet grid connectivity demand from upcoming renewable power generation projects.
A key segment of the transmission network is cross-border power exchange. The power system has about 50 interconnectors with six European countries and operates with varying power allocation methodologies for export and import transactions. Renewable energy, especially offshore wind, has been a major driver in the interconnection projects. Furthermore, there is an EU requirement of 15% interconnection capacity, making it imperative for the utility to expand the cross-border power links.
Cross-border Transmission Linkage
| Country Linkage | TSO | About the Linkage |
|---|---|---|
| France – Italy | RTE and Terna |
190 km long double underground line with 600MW capacity each, operational in 2023. |
| France – UK | RTE and National Guard | The first link was operationalised in 1986, with two more links added since then. |
| France – Spain | RTE and REE | The EU and EIB funded project, operational since 2015, with a capacity of 2GW. |
| France – Germany | RTE (France) TransnetBW (Germany) Amprion (Germany) | Five electricity interconnectors in operation with a total capacity of 3.0GW, construction of two additional interconnectors is under planning with total capacity expected to go up to 3.3GW by 2025. |
| France – Belgium | RTE (France) Elia (Belgium) | Two interconnectors with the first one being commissioned in 1974 with 380kV AC lines, total transmission capacity has been upgraded to 6.0GW from 3.0GW by installing high temperature, low sag (HTLS) conductors. |
| France – Switzerland | RTE (France) Swissgrid (Switzerland) | Interconnected since 1958 with 220kV level, new 380kV lines have been constructed to replace the 220 kV line, with current power transmission capacity of 3.7GW. |
Source: CRE, RTE, Terna, ElecLink, EIB, Offshore Energy
Drivers in Energy Transition
In the European region, France lags in the rate of renewable power capacity addition. Between 2018 and 2023, renewable power generation capacity grew at a compounded annual growth rate (CAGR) of 6.5%. An enhanced rate of capacity addition is needed to align with the European Union’s target of 42.5% as the share of renewables in the energy mix (Energy News, 2024). Steps are being taken to address this. The National Energy and Climate Plan (NECP) submitted to the European Commission in July 2024 refers to a 41.3% share of renewables in final energy consumption by 2030. NECP’s targets correspond to 54-60GW of solar, 33- 35GW of onshore wind, and 3.6GW of offshore wind capacity, besides additional nuclear power generation. These targets mean a significant jump in the renewable capacity pipeline, some of which is already visible in the government announcements of auctions (Enerdata, 2024).
Nuclear power generation is highly emphasised in policy, especially because of its decarbonising impact on the energy mix. For the transmission operator, nuclear energy also helps as a stabilising resource against intermittent renewable energy in the grid. Furthermore, its highly competitive cost has helped the power system become a net exporter in cross-border power market transactions. In June 2024, the government announced approval for eight nuclear power reactors for commissioning in 2035 onwards (Energy News, 2024). Availability of the capacities could be subject to uncertainties in costs and implementation, considering the experience so far (FT, 2024). Yet, nuclear power acts as a key hedge for the power system to balance the needs of a clean yet stable energy supply.
The dominance of nuclear power is also the reason why the role of coal-based power is at a negligible level (0.3% of generation in 2023). Gas has a relatively higher contribution. However, excluding the year 2022 as an outlier (supply crunch arising from the Ukraine war), the average share of gas-based power generation between 2018 and 2023 has been 6.5%. Any further reduction in the share of gas would require sufficient capacities in baseload generation (such as nuclear) to enable smooth grid management.
Policy Regulation
The NECP highlights a significant increase in electricity demand from the industrial sector as it shifts away from fossil fuels, regardless of the technology used (such as hydrogen, carbon capture, or electrification). This will require adjustments to the electricity transmission and distribution networks, especially in areas with high concentrations of energy-intensive industries. To accommodate this, under the Renewable Energy Acceleration Law, connection times for energy projects will be shortened. However, in congested areas and while the necessary grid infrastructure is being developed, priority may be given to certain projects for connection to the grid based on their ability to reduce emissions or level of maturity. This shift is expected to add further strain on the grid’s flexibility, already challenged by the increasing share of intermittent renewable energy sources (European Commission, 2024).
The tariff framework is of major significance for RTE. Tariffs are set every four years under the Public Transmission User Tariff (TURPE) and adjusted annually based on inflation, a cost factor (0.49%), and a clearance coefficient to balance the Income and Expenditure Regulation Account. Presently, TURPE-6 is in effect, spanning the period August 2021- July 2025. Tariff values are revised annually within this framework. In this regard, it is notable that the regulator postponed the application of a tariff rise, originally planned to take effect in August 2024, to February 2025. This was done to monitor the fluctuations in energy costs that would impact the households and other end consumers (Energy News, 2024).
Among other important parameters, the regulator approves RTE’s regulated rate of return based on the weighted average cost of capital (WACC). For the current regulatory period, the WACC is set at 4.6% (RTE, 2024). This is lower than the 6.125% approved in the previous regulatory period. The next tariff-setting period will be important for the utility in determining its financial preparedness for planned investments and business growth.
Market Opportunity
RTE has proposed an investment of €100 billion between 2024-2040. The proposed investment is likely manageable due to the favourable credit rating and regulated asset base of the RTE. In April 2024, RTE successfully issued two tranches of €500.0 million bonds, reflecting market confidence in RTE’s creditworthiness, further validated by Standard & Poor’s renewal of RTE’s long-term “A” rating with a stable outlook (RTE, 2024) (RTE , 2024). Notably, the proposed investment of €100 billion stands in stark contrast to the €39 billion originally budgeted in the transmission planning period of 2021-2035.
The planned investment outlay, indicating the scale of grid capex, is a significant increase over the recent past – €1.2 billion in 2019, which rose to €1.7 billion in 2023 (RTE, 2024). There is also a marked shift in the planned investment towards new or expansion projects, against the predominance of renovation or system strengthening ones earlier. Modernisation, digitalisation and asset renewals made up about 40% of the investments in recent years. The upcoming investment period will likely be driven by major expansion projects, including interconnectors and offshore wind power project connections.
Estimated Transmission Grid Spend
| Year | Spend ($ billion, real 2023) |
|---|---|
| 2024 | 2.5 |
| 2025 | 3.1 |
| 2026 | 3.7 |
Source: BNEF
There is a commitment to double the power interconnection capacity by 2035 (from 15GW to 30GW). Such a milestone will align the country’s power transfer capacity with the European Union’s stipulated 15% interconnection capacity as a share of total generation capacity. Presently, the country is marginally above the 11% level.
The interconnection with Spain, presently under development, could be one of the key links to expand its cross-border power exchange capacity by 2030, besides opening up a new power market with Ireland.
Anticipating the emerging material requirements, the grid operator has begun finalising the critical deals. In November 2024, RTE announced a significant €1 billion deal with multiple European fibre-optic cable manufacturers for about 5,200 km of high- voltage underground power cables. The deal requirements include exclusive manufacturing within Europe, with about a third of it within France. The investment of €668.0 million in domestic production will utilize almost all of France’s remaining cable manufacturing capacity until 2028 (Reuters, 2024) (RTE, 2024).
Outlook
RTE’s ten-year network development plan projects 5,000 km of new transmission lines to meet the energy transition roadmap outlined in the policy objectives. A major thrust is on the interregional power transmission, aiming to double the capacity by 2035. HVDC transmission systems are likely to be preferred for the upcoming interconnectors, especially those involving submarine links. Ageing of the transmission network may, however, occupy a bigger share of the planned investments. RTE’s observations in the transmission plan filings placed this in context. The historical asset renewal spending outlay, at an annual average of €400 million, needs to be €650 million by 2035 and roughly double thereafter (Ember, 2024).
The network planning scenarios must incorporate the possibilities of extreme weather events, as was seen in 2024. Shifting overhead lines underground in recent years may be one way to ensure resilience, but this will also entail additional costs. Also, a rapid grid strengthening process may not be very feasible, considering the sheer scale of aged assets in the transmission network. In the short term, the absence of a renovated network will make it increasingly susceptible to weather events.
Timely network availability is also essential for cross-border power exchange. The construction work on the Bay of Biscay link (France-Spain), for instance, was paused due to a court ruling. While RTE has confirmed a commissioning schedule by 2028, a possible delay in this project could depress the Iberian market prices (due to the Spanish renewable energy supply) (Montel, 2024). Several other planned interconnector lines must be commissioned in time to fulfil the government’s offshore wind power targets. The cross-border links have been instrumental in French power exports to the larger European power market so far.
With the pace of grid expansion and reinforcement projects rising, power transmission tariffs need to be revised. The government’s intervention in this context, as observed in its recent suspension of a planned tariff revision, does not send the right signals (Energy News, 2024). It remains to be seen how the regulator will budget for the planned step- up in transmission and distribution capacities. Meanwhile, the transmission operator must strive to meet the targeted capacity by the end of 2035.