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France

France

Tariffs from utility EDF too generous says energy regulator

The new tariffs at which national utility EDF guarantees to buy electricity generated from wind power, announced by the industry minister in July (Windpower Monthly, September 2006), is unnecessarily generous according to the French electricity regulator, CRE. In its capacity as advisor to the minister, CRE issued a report in June recommending against the revised tariff structure, arguing it could cost an additional EUR 1-2.5 million a year by 2015, or add EUR 2-6/MWh to the wind portion of electricity bills which currently stands at EUR 4.5/MWh. Furthermore, CRE estimates the tariffs could give investors in wind power projects after-tax profits of 20-40%, guaranteed for 15 years, for plant located in medium wind speed sites. CRE considers the rates could be decreased by at least 6% for an installation operating for 2400 hours a year and by 10% for one operating 2600 hours a year and still return a reasonable profit, at far less cost to the public purse. "In these conditions, the obstacle to wind power development in France is not the tariffs," says the report. It would be far cheaper and just as effective, CRE argues, to improve the administrative framework governing wind power installations, strengthen national and regional objectives and tackle the problem of public acceptance. CRE's long held opinion is that the only acceptable way forward for wind power in France is by means of competitive tenders. The French Renewable Energy Syndicate (SER) disagrees with CRE's estimates of profitability, as, indeed, does the industry ministry. Based on what SER's Marion Lettry calls "more realistic criteria" for project financing, both SER and the ministry consider earnings will be closer to 8%. SER argues this could fall below 4% on less windy sites.

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