France - Offshore prospects bright as onshore wind flops

FRANCE: Offshore wind is stealing the limelight in France, with the allocation last year of four projects totalling 1.9GW and a second tender for 1GW in January kick-starting the industry.

On trend: Strong French fashion statement belies industry’s difficulties (photo:Chanel)
On trend: Strong French fashion statement belies industry’s difficulties (photo:Chanel)

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By contrast, the onshore sector is struggling against ever more complex regulations and uncertainty over the guaranteed purchase price.

The result is a dramatic fall in new installations, with just 810MW added in 2012, against 954MW in 2011 and a high of 1,084MW in 2010. There are no signs of improvement — the industry fears only around 700MW will be built in 2013.

Installed capacitfrance capacity piey in France has now reached 7.53GW, all of it onshore and including 81MW in the overseas territories. The country is targetting 19GW onshore and 6GW at sea in 2020, though these targets are looking increasingly unlikely.

Full steam ahead offshore

Of the four offshore projects awarded in April, three totalling nearly 1GW went to a consortium headed by utility EDF Energies Nouvelles (EDF EN) in partnership with Danish developer Dong Energy, for which manufacturer Alstom will supply the turbines. Spain's Iberdrola utility and local developer Eole RES clinched a 500MW project, this time with Areva turbines. The two consortia now have until October to complete technical and financial feasibility studies and confirm the viability of the projects.

In the meantime, Alstom was due to start building the first of two factories at St-Nazaire assembling nacelles and generators for its Haliade 150 6MW offshore turbine in March. They are due to start production in 2014.

A second tender, which was originally to have been launched last April for 3GW, was finally announced in January for just two zones, including one deferred from the first tender, with a combined capacity of 1GW. The prime minister said the government was "thinking about" launching a third tender.

Obstacles onshore

The industry is more immediately concerned about trying to get onshore deployment back on track. The year started relatively well, with the new government promising to simplify the permitting process. It was not until the autumn, however, that its proposals were put before parliament, attached to a controversial bill introducing progressive energy pricing.

Most importantly, the government proposed scrapping the wind power development zones, which define where turbines must be built to benefit from the guaranteed premium purchase price. The industry has long argued that the zones are too vulnerable to legal challenges and have, in any case, been made redundant by the introduction of regional wind power plans, currently being finalised, which also identify where plant can be built.

The bill also proposed removing the minimum threshold of five turbines, which has slowed deployment in areas with widely dispersed rural populations, and a special exemption allowing export cables from offshore sites to pass through "remarkable areas". However, the bill was rejected by the upper house in October and is now going through a second reading.

At the same time, the government shows no inclination to remove, or simplify, the ICPE regulations, which subject wind farms to a strict environmental-protection regime. Introduced in 2010, these regulations are now coming into effect. The industry is anxious to see what happens, particularly as regards plants already operating. The authorities can ask for studies to be repeated and for certain modifications, though it is not yet clear how far these can go.

Legal challenges

To add to the industry's woes, last spring the onshore tariff was attacked by an anti-wind group on the grounds that the government had not previously notified the European Commission. The case was referred to the European Court of Justice, which is not expected to reach a decision before the summer.

In the meantime, bank lending has effectively come to a halt, despite repeated government reassurances that the existing tariff remains in force and that it will guarantee contracts signed with EDF. Calls by the industry for the government to restate the tariff decree rather than wait for the court ruling seem to have fallen on deaf ears.

Developers are also being hit by changes in the way grid connection charges are apportioned, leading to substantial rises which are putting some projects - and even some companies - in jeopardy, the industry warns.

Given all this, it is hardly surprising that sector is in paralysis. While the government says it is aware of the need for urgent action, there's a chance nothing much will happen before the forthcoming national debate on energy policy has reached its conclusion, leading to a draft energy law in the autumn.

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