Founding member of CIRET Professor René Passet, a founding member of the Centre International de Recherches et Études Transdisciplinaires (CIRET), who has just passed away at the age of 99, is the French economist who succeeded in liberating economic discourse from its confinement in order to consider it within the infinitely broader context of life on Earth. Contemporary economic discourse has its origins in the image of the pin factory put forward by Adam Smith in his seminal work The Wealth of Nations. We are familiar with the principle. A craftsman, working alone in his workshop, can at best produce 10 pins in a day’s work. Therefore, ten craftsmen will produce around one hundred. However, ten workers working together in a machine-equipped factory and dividing the work between them may produce 10,000 pins, i.e., 1,000 each. This represents a 10,000% increase in productivity. National prosperity will therefore increase by the same amount. To this is added the principle of comparative advantage, which suggests that the English should manufacture and sell textiles to the Portuguese, in return for which the Portuguese will sell them Port wine. The entire contemporary economic system is based on this dual principle. The problem is that it oversimplifies reality. First question: Is a factory worker, who spends their time performing repetitive tasks that are imposed on them, more or less happy than a craftsman in their small workshop? Economists are more or less silent on this point. Second question: Is the desired abundance compatible with the quantity of raw materials and energy available in the Earth’s subsoil, and can the waste from industrial activity be absorbed by the Earth without causing damage? The classical economist is also silent on this point. And so it is René Passet who, in his best-known book, L’Economique et le Vivant, asks whether the principle of economic efficiency is indeed compatible with the principle of preserving and reproducing living organisms. However, this question has become fundamental to the very survival of humanity. Some people suggest that the ‘green economy’, ‘sustainable development’ and ‘renewable energies’ will make it possible to ensure compatibility between economic life and the preservation of living organisms. However, these are merely words. As Nicholas Georgescu-Roegen, who was an economist but also a physicist, clearly demonstrated, ‘economic development’ manifests itself as a local expression of negentropy. And energy consumption, in whatever form, cannot sustainably exceed the amount of energy available. And as soon as energy consumption on Earth exceeds the supply of solar energy, we have to draw on reserves, which are limited. We can see this clearly, for example, in the case of ‘rare earth elements’, which are now indispensable for electronics. The question, in line with the logic of the living world as espoused by René Passet, is how we got to this point. This is the subject of the comprehensive work he published under the title Les grandes représentations du monde et de l’économie à travers l’histoire (‘The Major Representations of the World and the Economy Throughout History’), which spans over 900 large-format pages. We will not attempt here to present a summary of this work, which would inevitably be incomplete. What we will take away from it is that the economic discourse, as it currently drives the majority of humanity, is an ideological construct. This ideological construct draws on philosophical currents that can be traced through history, and which have led to a worldview characteristic of the ‘modern world’. This worldview is leading humanity towards catastrophe, and that is why the assertion of a critical mindset is not only necessary but urgent, given the increasing effects of global warming and the poisoning of the biosphere. I will conclude with a personal reflection. In 1975, René Passet was the chair of my doctoral thesis examination board at what was then the University of Paris 1. I cannot imagine any professor of economics other than him who would have accepted a topic that fell more within the domain of anthropology than economics, and whose opening words were borrowed from Prof. Jacob Viner, ‘Economics is what economists say’. The passing of a man who will probably be recognised in the future as a pioneer therefore places a duty on us at CIRET to continue along the path he has thus charted. Hubert Landier René Passet, L’économique et le vivant, Petite bibliothèque Payot, 1983. René Passet, Les grandes représentations du monde et de l’économie à travers l’histoire, Les Liens qui Libèrent, 2010.
Tackling Poverty through Work
Nadia ANTONIN In a study published on 16 April 2026, INSEE reveals that the French redistribution system reduces income inequalities but locks beneficiaries into a structural dependency on public authorities. This reduction in inequality is mainly the result of four factors: 1) individualisable social transfers in kind; 2) cash social benefits in the form of replacement income; 3) collective expenditure; 4) levies (income tax and wealth tax). The INSEE study report also shows that, between the richest 10% and the poorest 10%, the income gap decreases from 1 to 20 before redistribution to 1 to 3.7 after the application of social welfare mechanisms. Finally, the INSEE analysis reveals that in 2023, more than one in two French people received more from the system than they contributed to it. Some claim that social welfare benefits in France trap people in an ‘inactivity trap’. Having examined the concept of poverty, we shall demonstrate that ‘work is indispensable to man’s happiness; it elevates him, it consoles him; and the nature of the work matters little’ […] (Alexandre Dumas fils). Examination of the concept of ‘poverty’ Ms Marie Lecerf from the European Parliament’s Directorate-General for Parliamentary Research Services points out (‘Poverty in the European Union’, March 2016), ‘there is no consensus on the definition of poverty, which is often defined by other concepts, such as well-being, basic needs, income or social exclusion, rather than by poverty itself’. According to INSEE, ‘a household and the individuals who make it up are considered to be poor when the household’s standard of living is below the poverty line, which is most often set at 60% of the median standard of living’. Like Eurostat and other European countries, INSEE measures income poverty in relative terms, whereas other countries (such as the United States or Canada) adopt an absolute approach. Absolute poverty refers to people who are unable to meet their basic needs (food, housing, etc.). The consequences of the decline in the value of work: living on state benefits Welfare dependency is over-developed in France. International comparisons reveal a ‘distinctive French exception’. Some refer to France as ‘the land of a thousand and one benefits’! The Directorate for Research, Studies, Evaluation and Statistics (DREES), the statistical department of the Ministry of Health and Social Solidarity, has entitled its presentation of the social protection accounts for 2024 ‘The French: Champions of Social Protection’. In 2024, social welfare expenditure reached €932 billion, i.e. 31.9% of GDP and an average of €13,650 per capita. In the EU-27, this expenditure accounts for an average of 27.3% of GDP. With redistribution having reached its structural limits, ‘France must be put back to work’. Work is the best way out of poverty In his book entitled ‘Celui qui ne travaille pas ne mange pas’ (‘He who does not work shall not eat’), Régis Brunet, a professor at the Catholic University of Louvain, points out that ‘from Benedictine abbeys to Bolshevik soviets, and from the Calvinist Reformation to capitalism’, St Paul’s dictum has continued to resonate: ‘He who does not work shall not eat’. This aphorism, adopted by Lenin during the Russian Revolution, expresses a social contract based on the ‘value of work’. In Candide, Voltaire writes: “Work keeps three great evils from us: boredom, vice and want.” Work is beneficial to human beings. According to Immanuel Kant, ‘the best way to enjoy life is through work: it is a profound deliverance that fulfils human beings, enables them to flourish in their freedom, rescues them from boredom and leads them to a deep understanding of practical interest, invigorates their reason, and ultimately brings them joy’. Escaping poverty through work certainly requires stability, fair remuneration and a favourable labour market, but also other essential conditions. Creating the conditions to enable individuals to succeed and progress through their work In his book ‘Development as Freedom’ (1992), the economist Amartya Sen proposes understanding poverty not in terms of insufficient income levels, but in terms of individuals’ ability to fulfil themselves: freedom of expression, dignity, self-respect, and participation in social life in general (what he calls ‘capabilities’). In order to restore work to its rightful place, we propose the following guidelines: – Reduce the tax burden on labour and productive capital. According to the OECD, France remains Europe’s champion of taxation. In 2024, the share of compulsory levies in France stood at 45.3% of GDP, compared to 40.4% for the EU as a whole (source: Eurostat). – Recognising work, i.e., identifying, assessing and rewarding each person’s merits. We must condemn bonuses for incompetence, nepotism and cronyism. In addition to the lack of recognition of merit, some people rightly complain about the devaluation of qualifications, particularly the PhD. – Combat envy, which is not confined solely to professional relationships. Described at the time as ‘social jealousy’, it lies at the root of a certain political ideal that advocates egalitarianism and reliance on welfare rather than financial prosperity earned through work. To conclude on the assertion that we can combat poverty through work, let us consider the Christian victims of the genocide perpetrated in 1915 in the Ottoman Empire. Having arrived as stateless persons, they found their place in society through their hard work. They received no help and held out with tenacity. They worked 16 hours a day, seven days a week. Hard-working and extremely dignified, they enabled their second-generation children to rise to the top of the hierarchy.
Michel ALBOUY, Frederic Bastiat au XXIe siècle. Un économiste visionnaire, eds EMS, 2026, 100 pages.
The aim of the book is to ‘revisit the work of a great French economist, little known in his own country but recognised abroad, for example in the United States, in the light of the current situation in 21st-century France’. The economist Florin Aftalion said of him: ‘Bastiat’s understanding of the workings of the state was so keen that he predicted the introduction of social security and that it would run into deficit even before it existed.’ In his book, Michel Albouy clearly demonstrates the continuing relevance of Bastiat’s ideas more than 150 years later. Bastiat believes that ‘the defence of the market and of competition appears to be one of the most enlightening issues for our era of resurgent socialism and interventionism’. He asks ‘why we pay such high taxes’, why the national education system struggles so much to properly educate young French people, why a war does not create jobs… By posing these questions, Bastiat proves to be a ‘visionary’. In his view, ‘the market and free trade are the foundations of national prosperity’, protectionism is recessionary, and price freezes create shortages. Bastiat criticises the inconsistency of citizens who approve of subsidies for businesses but criticise tax increases. At the heart of Bastiat’s thinking is also private property, which he considers a natural right predating the law, constituting ‘a bulwark against the arbitrariness of the State’ and a factor of freedom. He is a staunch advocate of the market economy, which makes it possible to ‘meet the real needs of ordinary people’, because it is ‘the most modest people, the poorest populations, who benefit from competition’. Using a bibliography of Frédéric Bastiat’s works as a starting point, Michel Albouy sets out his own understanding of the social role of economists, which he believes is to explain the consequences of economic policies and to inform public decision-making. This is precisely what Frédéric Bastiat did through his books and colums. Michel Albouy is Professor Emeritus of Finance. In particular, he observed that ‘it is the shareholder who finances their own dividend’ or that, in the event of a takeover bid, people criticise the resulting redundancies, forgetting that ‘the company in question was poorly managed and/or that the merger would make it possible to save what could still be saved’. Jean Jacques Pluchart
Tribute to Roger Guesnery (1943–2026)
By Jean-Jacques Pluchart On Tuesday, 14 April 2026, a tribute will be paid to the memory of the economist Roger Guesnery, Honorary President of PSE-Paris School of Economics and Professor Emeritus at the Collège de France, holding the Chair in ‘Economic Theory and Social Organisation’. His work contributed to advances in research on the functioning of public services: asymmetric information between the State and citizens, international coordination in the fight against global warming, rational expectations of agents, and the ‘second-best’ equilibrium, among other topics. Roger Guesnery co-founded DELTA (Département et laboratoire d’économie théorique et appliquée – Department and Laboratory of Theoretical and Applied Economics) with François Bourguignon. At the request of François Furet, then President of the EHESS, he was also the first head of the doctoral programme ‘Economic Analysis and Policy’ from 1981 to 1991. He served as Chair of the Board of Governors of the Paris School of Economics, and was a member of the Conseil d’analyse économique (Economic Analysis Council) and of the editorial boards of several renowned professional journals. He was Co-Editor-in-Chief of Econometrica (from 1984 to 1989), President of the European Economic Association (1994), President of the Econometric Society (1996) and President of the Association Française de Sciences Économiques (2003). He was awarded the CNRS Silver Medal (1993) and appointed as an Honorary Foreign Member of the American Economic Association (since 1997) and as a member of the American Academy of Arts and Sciences. The event brought together, in the Daniel Cohen Amphitheatre of the Paris School of Economics, around forty economics researchers, including two Nobel Prize winners and several professors from the Collège de France, the EHESS and the world’s leading universities. The speeches, which were often moving, provided an opportunity to appreciate Roger Guesnery’s human qualities, as well as the vitality of French research in economics – and especially in econometrics – which has already been honoured with five Nobel Prizes. Roger Guesnery’s latest publications Guesnerie R. et Stern R., Deux économistes face aux enjeux climatiques, Paris, Le Pommier, coll. « Essais – Savoirs et débats économiques », 2013, 128 p. Guesnerie R., Pour une politique climatique globale. Blocages et ouvertures, Paris, Éditions Rue d’Ulm, collection du CEPREMAP, 2010. Geoffard P.-Y., Guesnerie R. et Le Grand J., La Santé par quels moyens et à quels prix ?, Paris, PUF, 2010.
Antonin Bergeaud, La prospérité retrouvée, Eds Odile Jacob, 236 pages
The author opens his essay with a stark observation. After the Trente Glorieuses, a period during which Europe and France recorded growth rates of around 5 to 6% per year, enabling them to regain a level of GDP per capita almost comparable to that of the United States, a profound divergence gradually set in from the mid-1980s onward. This divergence has become so pronounced that France, like most European countries, now finds itself, in terms of GDP per capita, in a situation that is not unlike that of the post-war years. According to the author, the root cause of this decline lies in the accumulation of delays in achieving economic sustainability, but also in our inability to redirect the productive system toward innovation. The economic and social model shaped over the past four decades has allowed neither companies truly to take risks nor disruptive innovation to be financed effectively. Europe has thus become a space constrained by an entanglement of administrative, bureaucratic and regulatory norms. Each of these norms, in the social, financial, economic, industrial or environmental spheres, admittedly stems from legitimate preferences; yet their accumulation, as much as their interlocking nature, has generated such complexity that it now hampers the development of European businesses. This evolution has resulted in a decline in productivity at the very moment when productivity was being driven first in the United States by the spread of new technologies — personal computers, microprocessors, digital services and artificial intelligence — and then, over the past two decades, by China. Europe now finds itself in a position of heavy dependence on American digital services. The deficit associated with these services is estimated at more than €150 billion per year. Beyond this trade imbalance, such dependence above all reveals the inadequacy of a technological and industrial ecosystem capable of processing, hosting and enhancing strategic data. This weakness directly undermines Europe’s ability to develop high-performing, autonomous and competitive artificial intelligence models. The situation appears all the more worrying as power relations with Donald Trump’s United States and with China are hardening, while this transformation is unfolding in a particularly strained budgetary context for France. And yet, this context could also represent a historic opportunity for the Old Continent. It could compel Europe to reconnect with a genuine industrial ambition. For that to happen, Europe would need to be given a true driver of innovation, to stop artificially designating champions that capture funding, and to allow competition, experimentation and risk-taking to play a greater role in distributing the chances of success. It is equally necessary to stem the hemorrhage of talent, ideas and capital, and to put an end to the fragmentation of markets and career paths by offering more attractive careers, more flexible and dynamic environments, and better-adapted, more rewarding savings products. Artificial intelligence is undoubtedly still in its infancy; Europe could therefore reshuffle the deck by moving toward a more frugal model, compatible with climate objectives, and capable of establishing itself as a desirable benchmark. Economic history shows that setbacks are never irreversible. But such a recovery requires us to accept uncomfortable truths, finally to build a genuine capital markets union, to reject fragmentation and all that it entails, and to break both with the easy recourse to deficits and with the fear of change. For our social model can only be preserved over the long term at the cost of renewed economic efficiency. Ph Alezard
BESS: Sustaining Value in an Uncertain World
Column: Florence Anglès In the previous column, the focus was on verifying the project’s viability. But once this point is clarified, the question shifts. It’s no longer about whether value can be created, but whether it can be sustained. In a constantly evolving environment, the challenge is understanding when the equilibrium might become fragile. Sustaining Value: From EBITDA Volatility to NPV Sensitivity After verifying the structure’s solidity, the focus shifts to the sustainability of value rather than its mere existence. The question then becomes: do the projected cash flows remain stable in a realistic operating context, considering all technical constraints? Unlike traditional infrastructure, BESS construction projects are heavily dependent on revenues generated in the market. This makes them sensitive not only to price fluctuations but also to profound changes in market dynamics. At this stage, the aim is to assess risks to transform operational uncertainties into financial uncertainties, and thus measure how the investment reacts to key assumptions. Fragility of Revenue Streams and Risk of Market Saturation BESS projects often rely on multiple revenue streams, such as arbitrage, frequency response, voltage support, and sometimes capacity mechanisms. This diversity can reduce risk, but it also leads to exposure to market fluctuations. These markets are often highly competitive and can change rapidly. When new capacity is added, revenue margins tend to decrease, and past performance is no longer a guarantee of future results. In this context, the main risk is not the fluctuation of short-term earnings, but rather the gradual decline in margins over time. The key questions are: Weak revenues primarily affect EBITDA levels, but due to discounting and leverage effects, they can have a much greater impact on internal rate of equity. A project evaluated using overly optimistic growth assumptions, without considering downside risks, demonstrates financial vulnerability rather than genuine strength. Degradation, Efficiency, and Integrity of Long-Term Cash Flows Technical assumptions significantly influence financial results. In battery energy storage (BESS) projects, factors such as degradation, efficiency, and system condition directly impact the sustainability and reliability of cash flows. Battery degradation plays a significant role in energy production capacity, the duration of revenue generation, the need for capacity expansion, and the remaining asset value. Overly optimistic degradation assumptions may lead to inflated final cash flow projections, potentially resulting in an excessively high net present value (NPV). Other technical assumptions follow a similar trend: Even small deviations in these assumptions can have significant financial consequences. In some cases, they may be enough to push the project’s IRR below the investor’s cost of capital. The key question is: at what level of technical degradation or underperformance does the project become unprofitable? If small deviations in technical performance have significant consequences for returns, robustness should be prioritized over optimization. Schedule-related risk: commissioning delays and discounting effects Time is a critical but often underestimated risk factor. Delays in commissioning not only postpone revenue generation but also reduce the net present value. Initial cash flow plays a more significant role in net present value (NPV). An initial cash flow lag increases the risk to NPV, particularly in capital-intensive projects. A six-month lag may have a limited nominal impact but a disproportionate effect on NPV due to the discounting effect. From an investor’s perspective, the question is not only whether the lag can occur but also what lag the project can withstand without impacting its returns. Furthermore, a delay in commissioning can lead to various side effects, including: In leveraged structures, schedule risk can directly impact debt repayment capacity and refinancing conditions, thereby amplifying its effect on return on equity. The question, therefore, is not whether the project will ultimately be operational, but rather: how significant is the value erosion caused by an execution delay? Leverage, Coverage Ratios, and Resilience to Risk Ultimately, a project’s “bankability” is tested in a crisis, not in baseline scenarios. A project may appear robust under optimistic assumptions but prove fragile under more realistic adverse conditions. Stress tests must assess the robustness of the investment project under adverse scenarios, such as: At this stage, it is essential to make the following distinction: A project with a stable NPV under adverse scenarios is considered investable despite fluctuating short-term performance. A project with a marginal NPV under moderate crisis scenarios is considered inherently fragile. Conclusion Ultimately, the goal of risk assessment in battery energy storage (BES) mergers and acquisitions is not to create a perfect model or to account for every possible scenario. It is to answer a few practical questions, even if the answers are not always clear or perfectly structured. First, is the project feasible in a safe and realistic way? This is the starting point. Grid access, permits, regulatory compliance: if any of these elements are uncertain, the projected revenues become meaningless. The project may look promising on paper, but it simply won’t materialize. Then, assuming it does materialize, the question is whether its value will hold over time. BESS assets do not operate in a stable environment. Performance fluctuates, equipment ages, and market conditions change. What matters is not the base-case scenario, but the project’s behavior when conditions are less favorable. There is also the question of execution. Delays or friction, even relatively minor ones, can have disproportionate effects, not necessarily because they significantly alter the project, but because the time factor may not be as secondary as one might think. Costs skyrocket, revenues fluctuate, and the overall balance sheet changes. Over time, operational stability becomes equally crucial. A project unable to maintain consistent performance tends to accumulate problems. Individually, these problems may seem manageable. Together, they can become far more significant. Finally, there is resilience. A project should not be evaluated solely under favorable conditions. The real test is observing its reaction to pressure, declining revenues, rising costs, or less favorable market conditions. This is where the distinction becomes clearer. Some projects remain largely intact even when assumptions change. Others do not. This isn’t always immediately apparent, but ultimately, it’s what makes an investment worthwhile. Therefore, risk assessment
AEFR Seminar, 7 April 2026 Insurance and Coverage of Major Risks: Towards a European Approach
Jean-Jacques Pluchart Club Turgot attended the seminar on the insurance and reinsurance of systemic risks. Daphné Le Conte des Floris (AXA) presented AXA’s latest study on the perception of major risks in 2025, based on a survey of 23,000 policyholders and 3,600 experts in 27 countries. The survey reveals an increase in the impact of claims since the 2000s. The main factors, in order of frequency, are climate change, cybersecurity, geopolitical instability (since 2025), social divisions (especially in France), and damage to biodiversity. The survey also indicates that respondents are aware of the inadequacy of the current governance of polycrisis insurance in democratic systems. Rémy Lecat (ACPR) reported on the stress tests carried out by the ACPR to cover the risks posed by the climate and energy transitions. The tests show that coverage of the impacts of CO₂ emissions can be considered satisfactory overall, but that significant differences can be observed between regions and sectors of activity. The tests also focused on the coverage of property losses caused by clay subsidence and dam failures. They show that companies’ value chains can be severely affected by certain risks. These growing impacts will increasingly be covered by higher premiums and excesses, but also by ever-larger contributions from reinsurers and governments. Amélie Breitburd (independent expert) proposed the creation of interactive online platforms to serve policyholders, bringing together insurers, pension funds, brokers, mutual insurance companies, private equity firms, etc., based on the model of the platform created by Lloyd’s. These platforms would make it possible – for example, under EUInc status – to collect data on claims, calculate losses, pool coverage and provide back-office support. Edouard Viellefond (CCR) then presented the French ‘Natural Disasters’ scheme (CATNAT), which manages compensation for damage caused by exceptionally severe natural phenomena. This compensation scheme is activated following a ministerial order recognising a state of natural disaster. It applies to natural events that cannot be insured under standard policies, such as floods and mudslides, earthquakes, ground movements, avalanches and cyclones. However, CATNAT has been operating in the red for nine years, as the cost of natural disasters has continued to rise, reaching €6.5 billion in France in 2023. A reform in 2023–2024 introduced an increase in the CatNat surcharge (included in home and business insurance policies) in order to strengthen the scheme’s resources in the face of a sharp rise in climate-related claims. The reform also introduces a ‘presumption of refusal of insurance’, making it easier for uninsurable claimants to access cover. One seminar participant pointed out that coverage for major risks is increasingly provided by the claimants themselves (who are uninsured or subject to high excesses) and by the state (which is increasingly called upon). Another participant noted that the more numerous and significant the claims, the higher the insurers’ financial performance. At the European level, three directives regulate life and non-life insurance activities: Solvency I (introduced in the 1970s), which harmonises the minimum coverage rules; Solvency II (2016), which sets out the rules for calculating capital based on actual risks (market, credit, underwriting, operational – with two capital tiers) and defines the governance and reporting requirements for insurers; and Solvency III, which is currently under discussion.
Nicolas DUFOURCQ ,La Dette sociale de la France (1974-2024) – Éditions Odile Jacob, 2025, 544 pages
In his essay, France’s social debt (1974-2024), Nicolas Dufourcq performs far more than a mere fiscal autopsy; he conducts an ontological deconstruction of the French welfare state. As the head of BPI France, the country’s public investment bank, Mr Dufourcq exposes what he terms a “family secret”: that two-thirds of France’s sovereign debt, some €2 trillion, has morphed into a colossal “consumer credit” facility, used to bankroll daily benefits rather than to invest in the nation’s future. The diagnosis is as clinical as it is compelling. Mr Dufourcq identifies 1974 as the year of the fall, when France inaugurated its first “whatever it takes” policy, shifting from a contributory insurance model to a permanent infusion of debt-funded assistance. Invoking Clément Rosset’s philosophy of “the real and its double,” the author lambasts a collective denial that ignores the “longevity revolution” and its impact on a sclerotic economy. While the “social horse” gallops ahead, fueled by the “white powder” of debt, the “economic horse” is left gasping for air. To break this cycle, he proposes an “Iron Rule”: a constitutional mandate for strictly balanced social accounts. The work is meticulously documented, drawing on testimonies from fifty members of the political and administrative elite. Yet, despite being dedicated to the nation’s entrepreneurs, they are conspicuously absent from the interviews. Here lies the work’s tragic paradox, and perhaps that of France itself: by giving voice solely to the mandarins of the state, the analysis remains partially confined within the circle of those who managed, justified, or presided over the very imbalances it decries. When former minister Marisol Touraine “vigorously contests that deficits stem from runaway social spending”, the reader perceives the extent to which the chronicle of failure is still being written by its own protagonists. The original sin of the system has been the progressive decoupling of social rights from the requirement of production. This is the hamartia of a system that, by substituting social entitlements for wealth creation, has condemned its pact of solidarity to become little more than a pious wish, broken by the unforgiving arithmetic of economy and demographics. Recalling Virgil’s labor improbus omnia vincit, Mr Dufourcq reminds us that one does not reform a country by fighting against reality. The ultimate lesson is clear: the social Republic will be saved neither by incantations nor denial, but by rehabilitating wealth creation as the prerequisite for solidarity. France must now decide if it is ready for the discipline of the real. A lifetime civil servant and graduate of HEC Paris and Sciences Po, Nicolas Dufourcq is a former official of the Inspection générale des finances and has served as Chief Executive Officer of Bpifrance since its inception in 2013. Yoann Lopez
BESS: Securing the Foundations of Value Before Any Investment Decision
Florence Anglès Battery energy storage systems (BESS) are now widely recognized as essential assets of the energy transition. This is no longer in dispute. However, how their value is realized in practice is more complex. Unlike traditional infrastructure, there is no single revenue stream that guarantees their sustainability. Value generally stems from a combination of services, optimization strategies, performance degradation, and regulatory conditions—all elements that do not necessarily evolve linearly or predictably. This creates a unique situation in the context of a merger or acquisition. It is not a matter of acquiring a stable asset, but a system that evolves over time. Some aspects can be modeled, but a significant portion depends on the actual evolution of the situation—from a technical, commercial, and regulatory perspective. The question, therefore, is not simply whether the model works on paper. It’s more about understanding where it starts to weaken. In practice, risk assessment is less about listing problems one by one than about forming an opinion—admittedly imperfect, but coherent—on the actual viability of the investment project. And ultimately, this should answer a fairly simple question: should we move forward, renegotiate, or back down? Ensuring Structural Viability: Protecting the Foundations of NPV Before examining performance, a crucial question must be asked: does the project have a solid and enforceable right to generate cash-flow? In an M&A transaction in the field of battery energy storage systems (BESS), the most concerning risks are not those affecting margins, but rather those relating to the legal, technical, and/or regulatory foundations of the project. These factors are essential to the existence, duration, and execution of future cash flows and therefore have a direct impact on valuation. The goal here is not to optimize returns, but to ensure that value can exist. Grid Access and Interconnection Certainty For a battery energy storage system (BESS), grid access goes beyond a simple technical criterion; it represents the economic lever through which all revenues flow. The main risk factors are: Without firm and transferable interconnection rights, projected revenues remain largely hypothetical. From a valuation perspective, network fragility affects: • Cash flow duration, • Eligibility for ancillary services, • The long-term viability of the asset. If network access is uncertain, the numerator of the NPV equation becomes speculative. In this context, simply changing the discount rate does not remedy the structural deficiencies. It is essential to address the risk at its source, or to review the investment. 1.2 Regulatory Stability and Market Eligibility Battery energy storage system (BESS) projects operate within an evolving regulatory environment. Market rules, remuneration schemes, and network code requirements can change over time, sometimes significantly. The key questions are: Regulatory uncertainty not only affects potential growth potential but can also directly impact on the asset’s ability to contribute to the market. In this context, risks must be assessed beyond the current situation, considering the project’s resilience to different regulatory scenarios. Permits, Land Rights, and Transferability In the context of mergers and acquisitions of battery energy storage systems (BESS), it is important to emphasize that legal transferability is not a minor detail, but a key element for value creation. The ability to transfer permits, land rights, and contractual commitments to the buyer directly impacts the project’s transition from the development phase to the operational phase. At first glance, the permits and authorizations appear complete. However, their validity depends on their validity, conditions, and, above all, their transferability. Any uncertainty at this stage introduces an execution risk that is often underestimated during due diligence. Hidden charges may include unresolved legal challenges, conditional permits, or unusual obligations imposed on the developer. These factors These issues can have a considerable impact on the operation. They are not always clearly visible in the documentation but can have immediate operational implications. In practice, these risks can lead to: Time is a critical factor in infrastructure investments. Delays reduce NPV through discounting effects, while legal uncertainty increases perceived risk and, consequently, the required return. In this context, ambiguity regarding permit transferability is a classic source of value erosion. Delivery Model and Contractual Architecture The robustness of a battery energy storage system (BESS) project depends primarily on the consistency between its implementation model and its contractual framework. Even if the contracts appear comprehensive, their success largely depends on their adaptation to technical requirements and actual operation. One problem often overlooked in this field is battery degradation. It’s frequently considered a purely technical aspect, but it has a direct impact on finances. Over time, battery capacity and efficiency decrease, which also reduces their ability to generate revenue. If this isn’t properly factored into investment analysis, there’s a risk of overestimating expected performance. This naturally raises the issue of replacement. Indeed, key components (particularly batteries and containers) will require replacement during the system’s lifecycle. These interventions can lead to additional costs, operational constraints, and potential downtime. Consequently, in such an isolated or complex environment, the logistical challenges associated with these replacements can significantly contribute to increased costs and complexity. End-of-life issues are often neglected. Whether it’s recycling, recovery, or reuse, these aspects can impact residual value and must therefore be considered from the outset. Ignoring this can provide a partial view of the project’s profitability. Furthermore, managing battery degradation requires more than just technological improvements. It’s also essential to consider preserving their value over the long term. A sound investment isn’t solely based on perfect conditions, but also on considering the real-world constraints of use. Therefore, it’s crucial to anticipate degradation and its implications to ensure lasting protection. The responsibilities between the various stakeholders – system integrator, inverter supplier, energy management service provider, and maintenance provider – are often unclear from the outset. On paper, this seems manageable, but it can cause performance issues or even conflicts once the system is operational. Contracts don’t cover all possible situations. If the commissioning doesn’t accurately reflect actual operation, gaps appear. Over time, these shortcomings become risks borne primarily by the investor. These risks have very real consequences. They can delay operational
Round table organized on 31 March 2023 by the AEFR
The 28th regime: a new legal framework for innovative companies Jean-Jacques Pluchart The purpose of the round table is to examine the European proposal for a new European company status, provisionally referred to as the ‘28th regime’ (in addition to the 27 national regimes), EU Inc or Societas Europaea Unificata. On 18 March 2026, the European Commission presented to the Council a proposal for a regulation establishing a new company form that would complement the framework for the organization of services in the internal market (the 2009 Bolkestein Directive). It would complement the little-used statuses of the European Company and the European Economic Interest Grouping. The EUInc status is intended primarily for innovative European SMEs, SMIs and mid-cap companies. In his introductory remarks, Michel Cojean (AEFR) stated that this status would be primarily aimed at innovative start-ups and scale-ups. Its purpose would be to facilitate their financing during the development phase. It would respond to the proposals set out in the Draghi-Letta and Noyer-Kukies reports, which aim to enhance the competitiveness of European companies vis-à-vis US and Asian industries and services. Didier Martin (Bredin Prot law firm) clarified that the EUInc status would be fully digital, with registration taking less than 48 hours via a single European portal. It would not entail a minimum capital requirement and would provide access to the financial markets. However, the creation of this status would raise several challenges: how to reconcile it with national legal frameworks in terms of stock options, employment law, insolvency law, etc. Christian Noyer (former Governor of the Banque de France) argued that this status should be ‘simple, flexible and digital’. He highlighted the value of this project, which aims to raise between €50 million and €100 million in capital to finance scale-ups using European and foreign pension funds. André Trade (legal expert at the European Commission) clarified that the proposal is based on a regulation under Article 114 of the Treaty, which requires approval by the Council by a qualified majority, rather than a directive (which requires unanimous approval). This is why the proposal reflects a minimalist vision of the legal framework for the European company. It falls solely within the scope of company law, which raises issues of compatibility with other branches of law. Martin Guesdon (legal expert at the French Ministry of Justice) identified three advantages of this status: it can attract foreign investors; it encourages the creation of companies in Europe; and it stabilises the legal framework for business creation. However, it raises issues concerning the valuation of assets and the protection of financiers and creditors. He raised the question of which court would have jurisdiction in the event of disputes. Sandrine Mesnard (Director General of the Treasury) raised questions about the accounting and regulatory frameworks applicable to UEInc and about the tax regime applicable based on the company’s registered office or operational headquarters. Alain Clot (France Fintech) pointed out that the European market is currently experiencing a veritable exodus of talent working for fintech companies to the US market, as the European market is unable to raise the capital required (around €10 billion per year) to develop its 14 ‘diamonds’ and 100 fintech companies. He pointed out that in France, over €6 trillion of savings are held in current accounts or short-term guaranteed investments, and do not contribute to the financing of young, innovative companies. He believes that this status would prevent these start-ups from seeking tax loopholes rather than opportunities for productive investment. René Repassy (Member of the European Parliament and Professor of European Law) expressed pessimism about the chances of this statute being adopted quickly, given the debates it would generate within the European Council and Parliament. He is not certain that this status would sufficiently protect contracts and public interests, particularly in terms of taxation. He also criticised the name EUInc, which is borrowed from the US model. During the round table chaired by Pervenche Berès (President of the AFER), all the speakers acknowledged the strategic nature of the project, which is essential for Europe to regain a competitive advantage over the United States and China. However, they were also unanimous in acknowledging that its implementation will be a long and challenging process, given the scale of the issues it addresses and the interfaces it shares with other branches of European and national law, particularly with German co-management.