France still requires legal evolutions to meet targets

FRANCE: Jurisdiction around French wind projects has seen a number of improvements and simplifications. But the government must go further still.

(pic: Vecrorstate)
(pic: Vecrorstate)

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The considerable changes made to the French legal framework for renewables highlight the strong political will to develop all sectors of renewable energy. But it is the wind-power sector that has been especially affected, with changes in both the regulatory regime and the financial support mechanism.

Last August, the French Energy Transition Act introduced a single authorisation for energy producers such as onshore wind farms, which covers all necessary permits. It also carries a new risk of total rejection if just one regulation is infringed. But, while much still needs to be done to coordinate authorisations, early reports indicate it has achieved relative success.

Still, the complexity of the permitting process — and the ease with which third parties can challenge and paralyse projects — remains the main obstacle to developing a strong wind-energy sector and achieving the French target of 32% renewable energy by 2030.

A secured regulatory regime for offshore

This is particularly true for offshore wind projects, which are awarded through a competitive bidding process. Two government tenders produced a total of 3.5GW project awards in 2012 and 2014. However, the winning bidders are still going through the permitting process, the projects are not yet in construction, and commissioning is not expected before 2018. A third tender of up to 3GW is expected soon, and a request for floating turbine proposals is due in April.

In January, a decree relating to energy production and transportation facilities simplified the legal regime, extending marine licenses from 30 to 40 years from permitting, which is more consistent with the lifecycle of the facilities. It also extended the maximum of ten years allowed from when the power purchase agreement (PPA) was awarded to commissioning — at the bidder's request, the contracting authority can now extend it to 19 years.

Also in January, the offshore appeals process was simplified, assigned to one administrative appeal court, which is expected to speed up the judicial procedures. The challenge period has been also shortened to four months. This is a major improvement, as challenges from third parties are widely seen as one of the major obstacles for the development of offshore wind in France.

Financial support

Onshore wind-energy providers have been eligible for a government feed-in tariff (FIT) scheme since 2000, signing a PPA with utility EDF at a fixed tariff. Offshore projects are awarded through the competitive bidding procedures and, in both cases, the difference between tariff and market price is passed on to customers.

However, in the wake of the European Commission guidelines on state aid for environmental protection and energy for the period 2014-2020, the FIT scheme is being replaced by a system under which suppliers are awarded a top-up rate to meet any difference between production costs and market price. The new system should see suppliers secure a fair internal rate of return. The precise formula is expected this quarter, but the premium should be granted ex post, meaning at the end of a certain period of time that should be one year. It will be designed in such a way as to avoid negative market prices.

According to the Association of Renewable Energies, the sky is clearing for the French offshore wind industry. But government has still to confirm and take bolder steps. It should shortly release the Energy Multiannuel Programme 2016-2023, setting priorities regarding energy development. According to the first drafts, it wishes to increase the pace of renewables development by more than 50%. This objective should be ensured by leaving in place the FIT regime for onshore wind power at least until 2018; further improving tender procedures for offshore wind projects; and continuing administrative simplification measures.

Marc Fornacciari is a partner at Dentons

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