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France

French market secure again -- Minister reinstates wind prices

A long-awaited decree reinstating the 2006 premium purchase price at which state utility EDF is obliged to buy wind energy in France was issued in mid-December by environment and energy minister Jean-Louis Borloo. As expected, Borloo maintained the rates and structure of the support system, despite a legal challenge and a negative recommendation from the French electricity regulator, CRE (Windpower Monthly, October 2008).

The 2006 decree was annulled back in August by the Conseil d'Etat, France's highest administrative court, following an attack by opponents of large-scale wind power. They argued that the mandated purchase price was unnecessarily generous and gave owners excess profits at the expense of electricity consumers. The CRE, in its capacity as advisor to the minister, also considered that the rates were too high. It said that while profits for wind plant running for 2200 hours a year are "in line" with investor expectations, they are "manifestly excessive" for those on windy sites operating for 24 hours or more. CRE called for lower rates to be set for more windy sites.

CRE also argued that prices are too high for offshore installations, especially in estuaries and other shallow water sites, where the returns "clearly exceed the criterion of normal profitability imposed by the law." CRE recommended that offshore wind no longer be covered by fixed purchase prices but revert to a system of competitive tendering, as was the case before 2006.

CRE estimates that by 2015, when installed wind capacity in France is scheduled to reach 17 GW, electricity consumers will be paying an extra EUR 1.7-2.1 billion a year more than if the energy was delivered by conventional power plant. Despite CRE's fears, Borloo decided not to tinker with the French wind power market framework. He reinstated the rates for wind energy fixed in 2006.

For the first ten years of operation, wind power plant onshore are paid EUR 0.082/kWh for delivered energy. For the following five years, the rate varies according to the productivity of the site between a low of EUR 0.028/kWh for plant operating for an average of 3600 hours or more and a high of EUR 0.082/kWh for 2400 hours or less. For offshore installations, for the first ten years it is fixed at EUR 0.13/kWh, while the variable rate over the following five years ranges from EUR 0.03/kWh for 3900 hours or more to EUR 0.13/kWh for 2800 hours or less. Rates fall by 2% a year for plant built after January 1, 2008, though they are also adjusted to take account of inflation.

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