French Energy Bill to Boost Renewables, Skirt Nuclear Question

* Energy minister to present law to cabinet on Wednesday

* Nuclear energy to be capped at current 63.2 GW - sources

* No reactor closure to be mentioned in law - source

France is set to unveil a much-delayed energy transition bill on Wednesday that will avoid making tough choices on its dominant nuclear energy sector, instead focusing on measures to cut red tape currently stifling renewables and boost energy savings.

Energy Minister Segolene Royal's flagship legislation will include a cap on nuclear energy production capacity at the current 63.2 gigawatts (GW), but no nuclear reactor closure, a source close to the ministry and an industry source said.

That will effectively force EDF to shut some nuclear capacity, if it wants to connect its Flamanville reactor under construction to the grid in 2016 as planned, making the closure of the Fessenheim plant on the German border inevitable.

But apart from Fessenheim, which President Francois Hollande promised during his presidential campaign to shutter, the fate of other nuclear reactors will be left to so-called "multi-year energy plans" to be passed by decree later on.

These five-year plans will set production targets, adjusted according to power demand estimates, that utilities such as EDF will then take into account when deciding on their strategic investment plans and on which reactor to close, if any.

Hollande, who had pledged to cut atomic energy to 50 percent of French electricity production from the current 75 percent - the highest share in the world - has met stiff resistance from unions and local politicians about any potential plant closures.

Royal, his fourth energy minister since 2012, is keen to avoid a public focus on the nuclear question and ensure a swift passage of the bill in parliament, which will also contain a series of measures to boost renewable energy.

NEW TARGETS

Some new long-term targets will be set, including bringing the share of renewable energy in the country's final energy consumption to 32 percent in 2030, although France looks set to miss its current target of 23 percent by 2020.

"It's an ambitious target, considering that France is currently on course to reach 17 percent by 2020," the industry source said.

The growth in renewables has lagged neighbouring countries, with wind power capacity for instance reaching about 8 GW in 2013, against 33 GW in Germany, due to of complex administrative procedures and an uncertain legal framework.

France will also aim for renewable energy sources to make up 40 percent of its electricity production by 2030, versus less than 20 percent now, and 38 percent of heat production, the industry source said.

Authorisation procedures for wind farms and solar panels will be simplified and a reform of the current feed-in tariffs system that forces EDF to buy renewable energy production above market prices will be unveiled, the source said.

Finally, measures to encourage insulation work are also expected, although funding is likely to be a sore point, with the government already struggling to reach EU-imposed deficit reduction targets.

Wiping off the books a big chunk of its oil and gas imports is especially crucial to boost France's diminished competitiveness, since its 69 billion euro ($94 billion) energy bill amounted to almost all of its trade deficit in 2012. ($1 = 0.7345 Euros) 

Source