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France Expects Dip in Natural Gas Residential Consumers Through 2050

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France expects a reduction in network-served natural gas residential consumers by 2050, prompting the national energy regulator to consider how a smaller customer base can fund maintenance and infrastructure removal, in a new report published on Wednesday.

The Energy Regulation Commission, or CRE, found in a 2023 study that the network size would need to remain roughly the same by mid-century but that maintenance costs would not fall as fast as revenue losses as more customers disconnect.

In the updated study, it said that even under a scenario where it has decided to reduce the size of the natural gas network, with electrification a key driver, network reduction would still fail to align costs with revenues, given the dismantling costs involved.

The CRE estimates that under a moderate customer base shrinkage by 2050, average network tariffs, that make up about a third of a household gas bill, would rise 0.2% to 1.4% above inflation by then.

Under a rapid shrinkage scenario, the network tariff could rise 3.5% above inflation each year by 2050, it said, noting that it was refraining from making any comment on which scenario looks most probable.

While the report focused on the likelihood of network size reduction and decline, the CRE noted that it expects the network to be carrying more renewable and low-carbon gas by 2050.

In consultation with operators, European regulators, utilities and consumer organizations, the CRE said it has sought to define measures that would make necessary adjustments bearable.

It says that ensuring the sector continues to incentivize operators to provide a quality service is a must and that regulatory frameworks ensure there are incentives to guarantee network safety in a shrinkage phase.

Contemplating how to spread the cost burdens of network resizing between current and future consumers, the CRE said that complementary measures for financing infrastructure costs in the long term should also be considered.

Direct state financing of the costs or additional contributions from utilities should also be considered. Some state subvention of costs may also be necessary to protect consumers, the CRE said.

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