Trésor-Eco
The Economic Issues Surrounding Support for Renewable Electricity
The development of renewable electricity is essential for the electrification of uses and for achieving French green transition objectives. The sharp decline in generation costs in recent years has strengthened their competitiveness, though without eliminating the need for government support. This paper compares current support policies and forecasts a decline in the unit cost of government support in France.
Renewable electricity, when used to supplement nuclear energy, contributes to achieving the goals of the energy transition. This requires the widespread electrification of uses in transport, construction and industry. Renewables also enable us to reduce our dependence on fossil fuels, which are mostly imported, and thus strengthen our energy sovereignty.
The competitiveness of renewable energy development projects depends on the sector (solar, onshore wind, offshore wind, etc.) and the ratio between their cost and the market price of electricity. In 2025, market prices in France were lower than in most neighbouring countries. While the cost of renewable electricity has fallen sharply in recent years, it has not yet reached the average level of current market prices in France. Hence, the development of these sectors still requires government support.
Support for renewable energy aims to improve the return on investment. Its cost increases when electricity market prices fall, and vice versa. The increase in the volume of renewable electricity receiving support will automatically lead to greater exposure of public finances to market price fluctuations. As a result, support for renewables has had to change, in particular by transferring more of the risks borne by government to producers.
Until 2035, the annual cost of supporting renewable electricity will continue to be dominated by the cost of contracts signed before the end of 2024 (see Chart). As a result of lower generation costs for renewable technologies, the unit support cost for new facilities will be lower than for existing ones. So, for solar and wind power, the average full generation cost for supported facilities should be approximately €802024/MWh in 2035, compared with €1202024/MWh today, resulting in an automatic reduction in the cost of government support per MWh generated.
