France to Start Hydropower-Concession Tenders Next Year

France plans to start tenders for hydroelectric concessions in the first half of next year in a long-awaited move to bring competitors into the market.

“Competition is the best legal solution,” the finance, budget and environment ministers said in a letter to the state auditor, the Cours des Comptes, published on its website.

President Francois Hollande has previously held off pushing ahead with predecessor Nicolas Sarkozy’s plans to tender 5,300 megawatts of capacity. This week’s letter follows a study by the auditor that criticized the government, saying ministers’ vacillation may cost hundreds of millions of euros in royalties.

France’s hydro plants, the nation’s biggest source of power after nuclear reactors, are run by former monopoly utilities Electricite de France SA and GDF Suez SA. Under the latest plan, the government may group them by valley into concessions and adjust the expiry dates for current operating contracts.

EDF, which runs 80 percent of France’s hydroelectric capacity, has said it will fight to retain its concessions. GDF Suez, which has 12 percent, also said it will seek to keep its contracts and acquire as much as 2,000 megawatts from bidding.

Foreign competitors have urged France to open its hydropower market. Sweden’s Vattenfall AB intended to make an offer for concessions with ArcelorMittal, Solvay and Societe Nationale des Chemins de Fer Francais, the national railway, before announcing in July the closing of its Paris office and the end of its bidding plans, citing delays in the process.

Germany’s EON SE proposed bidding with Hydrocop Concessions, a power distributor in eight French regions.

France got 12 percent its its electricity production from dams last year compared with 75 percent from EDF’s 58 nuclear reactors. The country has 400 hydro concessions with a combined capacity of 25,000 megawatts, which were mostly awarded operating contracts for 75 years.