CAPN: increasingly attractive for industry

As the end of the Arenh mechanism approaches, several French industrial players have signed CAPN agreements (Contrats d’Allocation de Production Nucléaire – Nuclear Production Allocation Contracts), an alternative proposed by EDF for energy-intensive consumers. Long neglected, these contracts are now experiencing renewed momentum with the arrival of Bernard Fontana at the helm of the utility.

Four and counting. After the Belgian chemical group Tessenderlo, cement producer Vicat, and data center operator Data4, EDF has signed another CAPN with Lafarge, a French company specialized in construction materials. Signed on Wednesday, September 3, this agreement “covers part of the electricity consumption of all Lafarge’s energy-intensive sites in France,” the partners said in a joint press release issued the same day.

“This partnership gives us both long-term visibility and access to low-carbon energy, essential elements for our continued investments to produce very low-carbon, or even carbon-neutral, cement at scale,” underlined Xavier Guesnu, Managing Director of Lafarge France, in the document. The contract runs for a period of 10 years.

CAPN contracts are designed to supply electricity to energy-intensive industries at a competitive price close to production costs. Initially intended for large industrial consumers – and potentially for alternative suppliers later on – this scheme is meant to partly replace the Arenh, which ends on December 31, 2025. To date, the state-owned company has signed four firm contracts and eleven letters of intent with industrial players, covering a total of 16 TWh of nuclear electricity demand.

Bernard Fontana takes the lead

Long stalled, talks between EDF and energy-intensive sectors on CAPN contracts resumed with the appointment of Bernard Fontana as CEO of the state utility. The new chief executive “knows the industrial world very well, which has helped to smooth exchanges,” EDF told RGN. “Some conditions and contractual terms of the CAPN have also evolved.”

The same message comes from Uniden, whose members account for around 70% of industrial energy consumption. “The arrival of Bernard Fontana has indeed led to the resumption of bilateral talks between energy-intensive industries and EDF, and to adjustments that are moving in the right direction,” Nicolas de Warren, President of Uniden, emphasized to RGN.

Still, challenges remain for energy-intensive consumers. “Let us not forget that from January 1, 2026, industry will no longer have access to Arenh volumes at €42/MWh, which on average represented 60% of Uniden members’ supply in recent years… The step is a steep one,” he added.

Sharing the risk

One of the sticking points in negotiations lies in the very structure of the CAPN. In practice, EDF allocates a share of the capacity of the French nuclear fleet in exchange for a sharing of costs and risks on the volumes produced. These contracts thus limit industrials’ exposure to the volatility of wholesale markets while giving EDF visibility to finance its investments.

“Nevertheless, the core CAPN formula, ‘at cost / at risk’, based on ex-post actual nuclear production, introduces a double uncertainty: both in terms of the actual volume to be delivered and of the final price to be paid,” noted the President of Uniden. In his view, the post-Arenh framework still needs to evolve if French industry is to remain competitive internationally. “Perhaps new perspectives should also be considered, notably hydropower, on which an agreement has been reached with the European Commission — provided it is feasible,” Nicolas de Warren stressed. ■