No, the new wave of suppliers consists of companies with diverse profiles and distinct projects. Unlike the wave of new suppliers from 2016-2019, which had a business model focused on digitalization and affordable green electricity, the new entrants of the 2024-2027 period appear much more varied. This raises a question: who are they, and why do they want to become suppliers?

 

          They optimise your consumption 

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First, let's highlight projects led by tech start-ups focused on innovation, particularly in the flexibility of the electrical system (demand modulation, batteries, V2G...) or energy performance. These companies aim to enter the retail market to offer new services to consumers (B2B and B2C), enabling them to better manage their electricity consumption.

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In a similar vein, some existing companies already specialized in energy efficiency want to expand their activities by becoming suppliers. Their goal is to offer their existing customers a complete service.

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These different companies share a relatively similar objective: gaining new customers through a more complete offering (electricity supply + services), while targeting relatively niche markets (flexible customers, etc.). The following profiles, however, are less focused on acquiring new customers and more interested in better managing their assets and consumption.

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           Qui veut de mes électrons renouvelables ? 

 

We are witnessing a growing enthusiasm among renewable energy producers to become suppliers. Their main objective is, once again, not the 'mass market,' but rather to create outlets for their production facilities outside of support schemes.

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This interest mainly stems from the new contracts established (cPPA) and the increase in self-consumption. Indeed, producers can quickly find themselves limited in how they can value their assets and/or in establishing attractive offers for themselves and their clients. By becoming suppliers, these constraints disappear. But what exactly are we talking about?

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In addition to the obligations established by the law regarding the acceleration of renewable energy production, which encourages producers concluding cPPAs to obtain authorization, developers of small capacities (self-consumption solar, etc.), regardless of their size, will be able to more easily sell the production from their facilities via mini-PPAs, or even set up energy communities. More broadly, producers seem increasingly interested in the 'downstream' side to better value their renewable production and experiment with new business models.

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          What if I became my own supplier?

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Finally, large electricity-consuming companies are increasingly interested in becoming suppliers. Their goal is not to gain customers but to minimize their electricity bills. By becoming suppliers, these companies will have better control over their consumption. But how does this work?

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Becoming a supplier presents three major advantages. First, there is more effective optimization of energy purchases. Indeed, for each MWh that you buy or sell on the electricity markets, you will have several counterparties, which allows for diversity in each transaction and thus optimizes your energy purchases. Furthermore, you have access to a wider range of products (options, etc.). Next, it is simpler to 'net' multiple cPPAs or production assets directly rather than going through an intermediary. Indeed, your production and consumption are integrated into the same portfolio. Finally, the company can more easily implement energy flexibility strategies. You will be able to exploit your flexibility more precisely and at lower costs, for example, by shifting your consumption, without needing to leave a margin for an intermediary.

 

Of course, this 'profiling' of future suppliers is not exhaustive. Companies with different characteristics and strategies may also consider becoming suppliers. However, it is clear that new entrants no longer follow the typical profile of 'mass market' suppliers. They are now targeting niche markets or simply looking to optimize the management of their asset or consumption portfolios. The goal is no longer to attract as many customers as possible. What is most important to remember is the diversification of market players, as well as the diversity of offers and strategies.

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         What new challenges will suppliers need to face?

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The market is undergoing significant upheaval, and both old and new suppliers will need to be ready to adapt to these changes.

         

           The Post-ARENH​

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One of the main challenges for suppliers will be the end of ARENH starting January 1, 2026. With its disappearance, the wholesale market will play a predominant role in the construction of electricity supply offers.

To recap, ARENH allowed for better competition in electricity markets through the entry of alternative suppliers. It offered a fixed price of €42/MWh for a total volume of 100 TWh/year.

The new framework aims to consolidate a long-term electricity market with more stable prices aligned with the cost structure of the French energy mix. This framework will include market contracts with horizons of 4 to 5 years, as well as nuclear or renewable 'PPA' contracts. Finally, for new suppliers emerging in 2025 or 2026, ARENH is no longer part of the criteria for success to enter the market. They will focus on coverage via the market or PPAs, as the last window for ARENH is scheduled for November 2024.

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          The new capacity mechanism 

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The capacity mechanism has been in operation since 2017. Over the past seven years, numerous upheavals have occurred in the electricity markets, necessitating a redesign of this mechanism to better address current challenges. Moreover, the energy crisis has highlighted certain dysfunctions or errors in the system that need to be corrected.

The capacity mechanism was established to ensure the security of supply for the French electricity system, particularly during periods of high demand, such as in winter. Each year, suppliers must demonstrate their ability to cover their clients' consumption during winter peaks by acquiring an equivalent volume of capacity guarantees. Currently, a revamp of the capacity mechanism is underway (link to article), aiming to promote the development of flexibility resources.

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           The implementation of prudential regulation by the CRE (link to article)

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The crisis has highlighted the risky behaviors of some suppliers, particularly regarding the coherence between upstream supply and their downstream commitments. The CRE has therefore decided to work on various changes to the functioning of the electricity market to consistently monitor suppliers' offers and implement prudential controls. These changes will directly impact suppliers' choices regarding their coverage strategies. In addition to the impact on coverage strategy selection, suppliers will face issues arising from a high coverage rate, primarily the increase in financial guarantees, which are not always easy to mobilize.

 

          Price volatility

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One of the major challenges for suppliers will be the necessity of having the most accurate forecasting tools possible, as well as quickly adjustable production or consumption means, in order to avoid paying high prices, i.e., when prices reach extreme levels.

Indeed, the futures market remains under pressure, as we have observed this year. Short-term spot prices and spreads remain volatile, oscillating between positive and negative price peaks. The level of market risk is currently higher than before the crisis.

 

In conclusion, the French retail market is starting to move after being 'frozen' for several years due to the crisis. The waves of consolidation announced in the retail market have not occurred. However, this does not prevent acquisitions/mergers from taking place in the coming years.

The number of suppliers in France is expected to increase significantly from 2025 to 2027; however, most of these suppliers will not offer services aimed at the mass market and will focus on specific niches

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