May 14 (Bloomberg) -- France wants to grant extensions to holders of hydroelectric concessions, scrapping plans to hold competitive bids for the contracts.
Energy Minister Segolene Royal will make the case to the European Commission on May 19 for prolonging the concessions in the short term to allow for investment, she told a Senate hearing today. “It would be the best solution,” she said.
Royal unveiled a plan last month for the creation of state-controlled companies to operate hydroelectric dams, scrapping a promise by the previous government to put them out to tender. That system could be put in the place after concessions have been extended, a move requiring the commission’s approval, she said today.
Hydroelectric dams, France’s biggest sources of renewable power, are now mostly in the hands of state-run Electricite de France SA and rival GDF Suez SA through its Cie Nationale du Rhone, or CNR, and Societe Hydro-Electrique du Midi units.
Concessions for 150 dams, a quarter of total capacity, will come up for renewal before 2023, Royal said last month.
President Francois Hollande held off a plan by his predecessor Nicolas Sarkozy to open bids for 5,300 megawatts of capacity. That prospect attracted interest from European utilities including Vattenfall AB and EON SE. The state auditor has said delaying tenders may cost hundreds of millions of euros in royalties.
The European Union in September announced a probe into how hydropower contracts are awarded in countries such as France and Portugal, where projects are operated by state-run companies.
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