France's load shedding program until 2026 faced major inefficiencies, with over €1.6 billion spent on a flawed system that may have created ghost capacities and disguised subsidies.
Load shedding system criticized for inefficiency
The Court of Auditors recently published a report criticizing the load shedding system in place until 2026, which involves reducing or temporarily suspending electricity consumption during peak demand periods. The system relies on contracts with industrial and tertiary sector companies, and sometimes individuals, who are paid for reducing their electricity use.Public funding used to support load shedding
The government invested nearly 430 million euros in public funds to support the load shedding program between 2018 and 2025, with an additional 1.18 billion euros allocated for the future. The Court of Auditors estimates that more than two-thirds of this expenditure could have been avoided without affecting the program's outcomes.Load shedding tender used a single-price auction
The load shedding tender, which was in effect until 2026, used a single-price auction system. In this system, the lowest offers were accepted up to the desired volume, and all participants were paid at the price of the last accepted offer, known as the "clearing price." This created an incentive for some participants to inflate their costs.Tender under-subscribed and over-subscribed in different periods
From 2018 to 2024, the load shedding tender was undersubscribed, meaning there were not enough participants. This lack of competition allowed actors to submit offers close to the price ceiling. In 2021, the ceiling was doubled to 60,000 euros per megawatt, but by 2025, the tender became oversubscribed, and the price dropped to 28,863 euros per megawatt.System flaws allowed disguised subsidies
The Court of Auditors identified flaws in the system, including a lack of coordination in identifying savings and designing tenders. The mechanism allowed for "disguised subsidies" to industry, which was a known issue. For individual load shedding, operators submitted prices close to the ceiling, receiving payments three and a half times higher than their initial requests.Coup de pouce program ended due to abuse
The Coup de pouce program, which subsidized connected heating control systems, was terminated due to abuse and fraud. The combination of this subsidy with the load shedding tender payments led to high profitability for some economic actors, even under unfavorable cost assumptions.Load shedding capacities may not have existed
Tests by RTE, the French electricity transmission system operator, showed that less than 75% of the declared load shedding capacity was actually reliable. This led to accusations of "ghost" capacities, where aggregators declared prices just below the ceiling to remain inactive while still receiving payments.No control over returns on capital investments
The Energy Code requires that payments for capital investments do not exceed a normal return on capital, but no such control was implemented. The administration believed that competition alone would prevent overcompensation, aligning with European doctrine. However, the Court of Auditors criticizes this approach and calls for more systematic oversight.New capacity mechanism replaces load shedding tender
The load shedding tender ended in 2026 and was replaced by a renewed capacity mechanism, financed by a tax on electricity consumption. This new framework includes load shedding, batteries, and dams as decarbonized capacity. While multi-year contracts support new projects, there is no plan for ex post control of the actual benefits companies receive.
