France’s public and private sectors race to adapt as winter energy crisis looms

Both the French government and the private sector have been forced to find ways to adapt as gas and electricity prices have risen steadily for months, threatening several sectors with shutdowns in a bid to reduce costs – including swimming pools, gymnasiums and ski resorts.

As autumn approaches, Europe’s energy crisis is affecting several sectors in France. Soaring prices for gas and electricity are drastically increasing the operating costs of both public and private facilities.

Energy prices in France and across Europe hit all-time records in late August. And it looks like the crisis is not over yet: France’s year-ahead electricity prices spiked 25% to €1,130 per megawatt-hour, according to the European Energy Exchangemarking the first time the price of French electricity topped €1,000.

French President Emmanuel Macron has called on the country to reduce energy consumption in the coming weeks and months by at least 10 percent, warning that otherwise the nation could be facing rationing and cuts this winter.

“The answer is up to us,” he said on September 5, urging French people to use less air conditioning and heat to avoid power shortages. As Macron warns that obligatory energy cuts could be introduced if voluntary efforts aren’t sufficient, several sectors have already taken action.

Public swimming pools, ice rinks closed

Energy-intensive sectors such as swimming pools and ice rinks are being hit hard by rising gas prices. Operating company Vert Marine decided to close some 30 public swimming pools that it manages – in Montauban, Versailles and Limoges – on September 5.

About 10% of the 4,000 public swimming pools in France are managed through a public service rather than directly by the community where they are located. Vert Marine told AFP that it was “temporarily” closing a third of the 90 establishments it manages and has placed “staff on partial unemployment”.

In a press release the company stated that its energy bill had risen from “€15 to €100 million”, which it said was “the company’s entire annual turnover.” It has closed the ice rinks it manages for the same reasons.

The situation has angered many, as the closure denies access to seasonal ticket holders, people participating in sports programmes and school groups.

French municipalities have also expressed anger. The city of Champigny, located in the southeastern suburbs of Paris, told the French daily The Parisian that it was an “authoritarian and unilateral decision”. They also mentioned that discussions were “in progress” with Vert Marine to reopen the ice rink “as soon as possible”.

Cabinet ministers have said they are working with local representatives to find a solution.

“We are working with representatives from swimming pools and ice rinks as well as local authorities to find ways to reduce energy consumption,” said a joint statement last week from the minister of sport, Amélie Oudéa-Castéra, and the minister of energy transition, Agnès Pannier-Runacher, without providing further details.

“Additional measures will be considered in the event of high stress on the power grid,” they said.

Ski resorts in the crosshairs

Ski resort operators have also expressed their concern ahead of the winter season. Current electricity prices are “a huge obstacle”, Fabrice Boutet, general manager of the SATA group, which manages lifts at several ski resorts, told AFP.  According to projections, current prices would raise the group’s energy bill from roughly €2 to €20 million, he said, noting that lift speeds and opening hours would also have to be adjusted.

This increase in energy rates is “brutal and completely unprecedented”, said Laurent Reynaud of Domaines Skiables de France, a professional group of ski resort operators. “If electricity represented between 3 and 5% of turnover depending on the area, multiplying the bill by three or even four, as is the case today, would automatically increase costs to 10 to 20% of turnover.”

Although the sector’s professionals feel certain that their ski resorts will be able to open this year, they have called for state support.

Public services ‘at risk’

Local authorities have also been hit by rising energy prices, which has put a strain on the budgets of many French towns. Swimming pools currently top the list of expenses, but other local public services such as gymnasiums, museums, libraries and schools could be affected if solutions are not found in the next few months.

“Our budgets are exploding. Inflation is massively affecting all local authority buildings, whether they are for sports, cultural events or other things,” said André Laignel, vice president of the French Mayors’ Association. According to the APVFan association representing France’s small towns (Association of Small Towns of France), the energy expenses of some municipalities have jumped by 50%.

In a report published at the end of July, the French Senate warned that a rise in energy costs could put essential public services at risk and could force communities to abandon their investments in making the transition to green energy. Moreover, they could lead to an increase in local taxes, which affects household purchasing power.

The overall rise in energy costs for local municipalities is expected to hit €11 billion in 2022, according to BFMTV.

Several communities have been introducing measures for months in an effort to reduce their energy bills. The municipality of Limogeslocated in central France, lowered the temperature of its gyms and closed its ice rink this summer. Cities like Brive-la-Gaillarde in the southwest are planning to implement an energy plan in coming years that involves initiatives like reducing lighting in public places at night.

Partial unemployment and reduced production

Soaring prices are already forcing some companies – like Aluminium Dunkerque in northern France – to make strategic decisions about the upcoming winter. The aluminum smelter has decided to reduce production by 22% for the last quarter of 2022 so that it can pay its bills.

“From October, we will experience a very significant loss if we continue production as is,” the company’s general manager, Guillaume de Goÿs, told Reuters. He added that the company’s electricity bills could rise from €40 million per month today to €150 million in December, depending on electricity prices. For the moment, he said, the site’s 650 employees will continue to work full time.

Other steel companies have also announced production cuts and internal reorganisation to limit the impact of rising electricity costs. Ascométalwhich has 1,200 employees in France, will pause operations for two to three weeks in December at its Hagondange (in the east of France) and Fos-sur-Mer (near Marseilles) plants. Some employees will start working part time.

Renowned French glass company Duralex announced on September 1 that it would not use its furnace for at least four months starting in November and will place all of its employees on partial unemployment. “Producing at today’s energy rates would generate unsustainable losses,” said the company’s president, José-Luis Llacuna, in a statement explaining the decision.

But the hardest part will likely come in early 2023.

“Almost half of all companies – especially large ones, but not only – have to renew their electricity supply contracts. Some of them may find themselves with prices that have multiplied by as much as five times by January 2023,” entrepreneur Marc Alric told French daily The world.

With global energy prices unlikely to stabilise over the next few months, the coming winter may have a severe impact on industrial sectors across France and around the world.

This article is a translation of the original in French.

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