Reshaping France’s Renewable Energy Market: The Role of BESS under PPE 3

France has published its long-awaited PPE3 (2026-2035), outlining the country’s energy strategy for the coming decade.

Demand: Electricity demand is expected to increase, driven by factors such as industrial electrification, transport (EVs), heat pumps, and the expansion of data centres. Targets aim for 60% decarbonised energy use by 2030 and 70% by 2035, up from 42% in 2023. A national electrification plan will be published in May 2026.

Supply: Production of decarbonised electricity will rise from 458 TWh in 2023 to between 650 and 693 TWh by 2035. Nuclear remains the core of France’s energy system and is the major beneficiary of the PPE 3, while renewables continue to expand with a recalibrated ambition.

Opportunities

France plans to increase its share of renewables by securing pipelines through public tenders for offshore wind (AO10: +6 GW), solar (+2.9 GW/year until 2028), and onshore wind (+1.8 GW/year until 2030). This creates greater visibility and confidence for developers and investors regarding the future of the sector.

The solar sector is expanding and benefits from attractive project economics. It offers fixed-tariff CfDs (AO CRE) that guarantee long-term revenues, reduced equipment costs, mature technology, and an established development process that is faster than other technologies.

Greensolver views battery storage and hybrid projects as the next major opportunities, especially as the grid increases its share of renewable energy. BESS integration enables the existing grid to operate more efficiently and better manage high electricity price volatility, curtailment, or episodes with negative prices.

BESS benefits from positive drivers, such as falling battery costs, and a diversified revenue stack that combines market, fixed-tariff, ancillary markets, and capacity market payments.

• To improve the bankability of BESS, projects can adopt fixed-price aggregator agreements (tolling/floor). These enable higher leverage, longer debt maturities, and facilitate meeting debt service coverage ratio (DSCR) thresholds.
• BESS projects can generate higher returns by increasing market exposure via arbitrage trading: charging during periods of low electricity prices and discharging when prices are high.
• Hybridising existing brownfield solar assets can improve project IRRs by unlocking additional revenue streams.

In 2025, France’s battery storage capacity stands at 1.5 GW, with a further 1.2 GW already securing grid connection agreements. The PPE 3 does not set any targets for BESS. Based on current market estimates, Greensolver expects battery storage installed capacity to reach 5.4 GW by 2030, and nearly 10 GW by 2035.

Risks

Rising electricity prices and potential for deindustrialisation could lower demand growth, potentially causing it to fall short of current forecasts. PPE 3 includes a review clause in 2027, based on changes in electricity consumption.

There is a risk of oversupply in electricity production, but France’s interconnections and its role as a major electricity exporter help to mitigate this.

Reliance on storage will require more equity capital, as BESS assets are financed at lower gearing ratios compared to wind and solar. Battery storage presents risks because it is still emerging, facing evolving regulations, limited lending precedents, and higher operational complexity in managing and optimising multiple revenue streams.

Market saturation poses a risk for battery storage due to potential oversupply and revenue cannibalisation, reinforcing the need for diversified revenue streams and fixed-price agreements.

Uncertainty exists regarding the optimal duration for BESS projects, with newly announced projects targeting 2 hours but longer duration batteries reaching 3-4 hours.

Grid saturation and permitting hurdles may limit the deployment of new renewable capacity.   Investments in grid reinforcement will be critical. Battery storage and optimisation software can help enhance grid efficiency.

Written by Simon Hery, Project Finance/M&A Analyst