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France

France

Year of expectations dashed but still optimistic -- Disappointment in France

French wind power experienced moderate growth in 2004, with 150 MW of new capacity to give a total of 366 MW in mainland France by year end. Over 100 MW of came online in the last quarter of 2004, more than the total for the whole of 2003. Most industry observers agree that growth will continue at a faster rate through 2005, though this is not the first time the French market has been slated for take-off, only to find itself hovering at ground level.

There is room for optimism. Construction permits have been granted for at least 850 MW of new wind plant and up to 500 MW could be added under a government tender for onshore wind. Not al of this wil come on stream, but energy agency ADEME estimates that French wind capacity could double, to reach 800-900 MW by 2006.

The burst of activity is due to a number of factors. Administrative procedures and grid connections are being processed more quickly, while developers also have better experience of how the system works. At least some regional authorities have taken note of the government's instructions from 2003 on how to respond to planning applications -- and encouraging them to take a national rather than purely local view.

Nevertheless, developers say there are still wide variations between the regions and continue to complain of administrative delays. With at least 25 different administrations involved in each planning application, on average it takes four years in France to complete a wind power project. Help may be at hand. Industry members are eagerly awaiting the establishment of a state-run national wind power committee to act as a much needed co-ordination and advisory body (page 10).

France operates a hybrid market structure for wind energy: fixed premium purchase prices for projects under 12 MW, introduced in 2001, and a competitive tender system for larger projects, introduced in 2003. The results of the first calls to tender for 500 MW of projects on land and 500 MW offshore, issued last year, are still awaited.

Developments under 12 MW earn EUR 0.0838/kWh for the first five years of operation. Over the following ten years, the rate varies according to the productivity of the site, between a low of EUR 0.0305/kWh to a high of EUR 0.0838/kWh. Applied to new plant, the rate falls by 3.3% a year and by an additional 10% (a one-off drop) when total installed wind power from projects in the program reaches 1500 MW.

Developers dislike the 12 MW ceiling, saying it leads to small, scattered projects and increased costs. They have lobbied long and hard to have the cap reviewed and there are signs the government position may be shifting. Few observers think the cap will be removed altogether because of the "huge" cost to Électricité de France (EDF). It is more likely it will be adjusted to perhaps 50 MW.

The competitive tender process for projects over 12 MW is also heavily criticised by the industry, particularly the assessment criteria for picking winners (Windpower Monthly, January 2005). The winners of the offshore bid should be announced within the next few weeks, after which developers have until January 2007 to bring their projects online. The onshore bidding process closed at the end of January and results are not expected until the summer, though projects must be completed by January 1, 2006 -- a deadline the industry says is impossible to meet.

industry fears

Even if 2005 does result in a development boom, France is a long way from meeting its EU renewable energy commitment. SER's André Antolini says that at present rates, around 2500 MW can be achieved by 2010, far short of the 8000-10,000 MW required for 21% of French electricity to come from renewables. In 2003, France had attained just 13.5% according to the latest European Barometer of Renewable Energies, published by Systèmes Solaires, with little of that from wind.

A principal industry fear is that the government lacks sufficient will to persuade parliament and the regional administrations that it is serious about achieving its target. Jean-Marc Armitano of the French Wind Energy Association maintains there is a "wide gulf between the rhetoric and the reality." Antoine-Tristan Mocilnikar, advisor on energy policy to the Interministerial Delegate for Sustainable Development, disagrees. The government is working hard to ensure local administrations are properly trained to fulfil their obligations within the expected timeframe, he says. He points to government guidelines outlining procedures for impact studies and says there are more to come. Such measures will ensure both the wind industry and the local administrations "speak the same language and have a clear understanding of the regulations."

FINANCIAL STRUGGLES

As wind development gets delayed and delayed, small French companies lacking the resources to tide them over are struggling. Larger, more robust firms, including a number of foreign entities such as Gamesa, Ecotècnia and ABO Wind, have been snapping up projects in financial difficulties -- preferably, those already granted siting permits. More such acquisitions are expected. Beno•t Praderie of ABO Wind's French subsidiary compares the situation to that in Germany ten years ago. "There will be a lot of stress in the market," he believes.

overseas interest

Nevertheless, France continues to attract the overseas wind industry. German companies have been eying the French market as their own matures, while the Spanish are looking for new opportunities to expand. Spain's Gamesa and German Enertrag have sizeable projects under construction to come online this year, while Ostwind, another German company, says it will start work on its huge 140 MW development in northern France.

Foreign turbine manufacturers continue to dominate the market (table previous page). Nordex holds the lion's share with just over 25% of total installed power, this despite supplying just one 1.3 MW turbine in 2004. Gerd von Bassewitz of Nordex France blames the poor year on problems at the German parent company, increased competition and the weakness of the French market. He has high hopes for 2005, with as much as 100 MW in the pipeline. Last year, GE was the biggest player by far, supplying 54 MW, or 36% of the total sold, with Vestas in second place with 26%. Together with Enercon and Jeumont, the lone French manufacturer, they accounted for 92% of new power added in 2004.

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