London (Platts)--21Nov2012/738 am EST/1238 GMT

French power grid operator RTE proposed Wednesday a plan to invest Eur15 billion ($19.2 billion) in the national transmission network by 2020 and said grid costs could hit Eur50 billion by 2030 if the Socialist government of Francois Hollande implements its planned partial phase out of nuclear power.

Grid investments are needed to improve security of supply and accommodate rising renewable power capacity, RTE said.

The level of investment will depend on the outcome of the imminent national debate on energy policy, in which the government plans to discuss with industry and social groups its plan to cut the share of nuclear power from 75% to 50% by 2025 and replace most of its capacity with output from renewable energy plants.

Hollande's government also wants to implement mechanisms to curb energy demand.

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RTE's report will contribute to the national energy debate as well as the governments multi-year PPI energy investment plan which is to be implemented in 2013 following parliamentary review.

Grid transport costs account for around 10% of customers' bills, and there has been much speculation about the rising costs associated with phasing out nuclear power and installing more expensive green energy types.

There would also be associated cost rises at the local distribution grid level to accommodate the new supply.

French state-controlled EDF continues to dominate the supply market and the government has kept the regulated tariffs charged by EDF at sub-inflation levels while also delaying compensation to EDF of public service taxes to subsidize green power.

In its report, RTE said that as well as investments of Eur1.5 billion/year already planned to 2015, up to 1,000 km of new underground or subsea cables would need to be installed, as well as new high and low voltage substations.

Depending on the nation's choice of energy mix going forward, RTE estimates required investments by 2030 at between Eur35 and Eur50 billion.

The upper figure may be hit if nuclear power is cut by a third, as currently planned by the government, and replaced with wind, solar, hydro and gas plants, RTE said.

Some Eur5 to Eur10 billion would go towards supporting the energy transition and Eur5 billion towards new interconnection capacity with France's neighbors, it said.

Other investments required from 2013 include work to rebuild power links across France's Massif Central region and in the north of the country from Normandy to Paris.

To facilitate the rising intermittent supply from renewable energy sources, RTE also plans to rebuild old links in the north of France and a new Mediterranean link between the Languedoc and Provence regions in the south.

--Robin Sayles, newsdesk@platts.com

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